West Virginia Commercial Lease Agreement

Introduction

A West Virginia commercial lease agreement is a legally binding contract that formalizes the rental arrangement between a landlord and a tenant for commercial property. This agreement establishes the terms under which a tenant may occupy and use commercial space for business purposes, including retail stores, offices, warehouses, industrial facilities, and other non-residential properties.

The agreement outlines the rights and responsibilities of both parties, including rent payment terms, security deposit requirements, maintenance obligations, permitted uses of the property, and the duration of the lease. Unlike residential leases, commercial leases in West Virginia are primarily governed by contract law and common law principles, with fewer statutory protections for tenants.

Legal Framework

West Virginia commercial lease law differs significantly from residential lease law. While residential tenants enjoy various statutory protections under WV Code Chapter 37, Article 6 and Article 6A, commercial tenants must rely primarily on the terms negotiated in their lease agreement. ^[1]

Key legal distinctions include:

No statutory limit on security deposit amounts for commercial leases

Implied warranty of habitability does not apply to commercial properties

Summary eviction procedures under WV Code Section 55-3A apply only to residential properties

Commercial evictions must proceed through unlawful detainer actions under WV Code Section 55-3

Greater freedom to negotiate terms, but fewer fallback protections

Expense Structures

Commercial leases typically allocate operating expenses between landlord and tenant using one of three structures:

Triple Net Lease (Nnn)

Under a triple net lease, the tenant pays all operating expenses, including property taxes, insurance, and common area maintenance (CAM) costs. The base rent is typically lower to offset these additional obligations. This structure is common for single-tenant buildings and experienced commercial tenants.

Gross Lease

Under a gross lease, the landlord pays all operating expenses. The tenant pays a single, all-inclusive rent amount. This structure provides cost certainty for tenants but typically results in higher base rent.

Modified Gross Lease

Common Operating Expenses:

Required Disclosures

West Virginia law mandates specific disclosures for commercial leases under certain conditions. Landlords must provide the following disclosures when applicable:

Hazardous Waste Disclosure

If the property was previously used for the storage, treatment, or disposal of hazardous waste, the landlord must disclose this information in the lease agreement. This requirement applies to lessors who owned or had an interest in the property during such use, or who have actual knowledge of such historical use. ^[2]

Underground Storage Tank Disclosure

If the property or the substrata below the property contains an underground storage tank, this must be disclosed in the lease. The disclosure requirement applies when the tank was actively used for storing regulated substances, or when the lessor has actual knowledge or reason to believe such a tank exists. ^[3]

Notice of Agency Relationship

Before signing any contract for representation, a licensed real estate professional must provide written disclosure indicating whether they represent the landlord, the tenant, or both parties (dual agency). This disclosure must be made on the official form promulgated by the West Virginia Real Estate Commission. ^[4]

Key Lease Terms

Lease Term and Renewal

Commercial leases in West Virginia typically range from 3 to 10 years, depending on the property type and tenant's business needs. The lease should clearly specify:

Commencement date and expiration date

Renewal options (if any) and notice requirements

Rent escalation provisions during the term

Early termination rights and associated penalties

Rent Payment Terms

The lease should specify rent amount, payment frequency (monthly, quarterly, annually), due date, acceptable payment methods, and grace period (if any). Late payment penalties and interest rates on overdue amounts should be clearly stated.

Security Deposit

Unlike residential leases, West Virginia places no statutory limit on commercial security deposits. Landlords may require deposits equivalent to several months' rent, particularly for new businesses or tenants with limited credit history. The lease should address:

Deposit amount and payment timing

Conditions under which the deposit may be applied

Interest accrual (if any)

Return procedures and timeline upon lease termination

Permitted Use

The lease should clearly define the permitted uses of the property. Commercial landlords often restrict tenant activities to protect other tenants and property value. Consider:

Specific business activities permitted

Exclusive use provisions (protecting tenant from competing businesses in the property)

Prohibited uses and activities

Zoning compliance requirements

Termination and Eviction

Notice to Terminate

Under WV Code Section 37-6-5, default notice requirements for lease termination are: ^[5]

Year-to-year tenancy: At least 3 months written notice before the end of any year

Periodic tenancy (less than one year): One full period notice before end of any period

Fixed-term lease: No notice required if lease specifies end date

These defaults can be modified by the lease agreement. Commercial leases often require longer notice periods (6-12 months) to allow adequate time for relocation or finding replacement tenants.

Eviction Process

Commercial evictions in West Virginia must proceed through traditional unlawful detainer actions under WV Code Chapter 55, Article 3, or ejectment proceedings under WV Code Section 37-6-19. The summary eviction procedures available for residential properties do not apply to commercial tenancies. ^[6]

Key eviction grounds include:

Non-payment of rent

Violation of lease terms

Unauthorized use of premises

Holdover after lease expiration

Abandonment of premises

Maintenance and Repairs

Unlike residential leases, commercial leases do not benefit from the implied warranty of habitability. Maintenance obligations are determined entirely by the lease agreement. Common allocations include:

Ada Compliance

Commercial properties open to the public must comply with the Americans with Disabilities Act (ADA). Title III of the ADA prohibits discrimination in places of public accommodation and requires accessibility modifications. ^[7]

The lease should clearly address:

Which party is responsible for ensuring ADA compliance

Who bears the cost of accessibility modifications

Indemnification provisions for ADA violations

Procedures for addressing accessibility complaints

Assignment and Subletting

Under West Virginia common law, a tenant may assign or sublet the leased premises unless the lease prohibits it. Most commercial leases restrict or prohibit assignment and subletting without landlord consent. Key considerations include:

Whether landlord consent is required (and standard: reasonable vs. absolute discretion)

Whether the original tenant remains liable after assignment

Recapture rights (landlord's option to terminate and re-lease)

Profit-sharing provisions if sublet rent exceeds base rent

Personal Guaranty

Commercial landlords frequently require a personal guaranty from business owners or principals, especially for new businesses, small companies, or tenants with limited credit history. The guaranty creates personal liability for lease obligations beyond the business entity.

Important guaranty provisions include:

Scope of guaranteed obligations (rent, damages, legal fees)

Whether guaranty is joint and several among multiple guarantors

Duration (full lease term, initial term only, or burn-off provisions)

Survival of guaranty through bankruptcy of the tenant entity

Waiver of defenses (notice, presentment, etc.)

Mechanics' Liens

Under WV Code Chapter 38, Article 2, contractors who perform work on commercial property may file mechanics' liens if not paid. This can affect the landlord's property even when the tenant contracts for the work. ^[8]

The lease should address:

Tenant's obligation to pay all contractors promptly

Landlord's right to post 'no lien' notices

Tenant's indemnification for any lien claims

Bond requirements for major tenant improvements

Insurance Requirements

Commercial leases typically require both parties to maintain specific insurance coverages:

Tenant Insurance Requirements

Commercial General Liability (CGL) insurance

Property insurance for tenant's fixtures, equipment, and inventory

Workers' compensation insurance (if applicable)

Business interruption insurance

Additional insured endorsement naming the landlord

Landlord Insurance (Typically)

Property insurance on the building and common areas

Liability insurance for common areas

Flood insurance (if applicable)

Rent loss insurance