In today's Freedom Friday blog and email newsletter, I want to answer another basic question that I am not frequently asked, but clients and prospective clients ask different variations of the same question all the time, “How should I handle breach of a commercial lease?”  Or “How should I handle breach of a contract?” And that contract could be a lease or any other type of commercial agreement.  In today's Freedom Friday blog and email newsletter, I'm talking about how to handle commercial lease breaches in 2025.

First of all, a commercial lease is a binding contract between a landlord and a tenant for commercial space (not residential).  A breach occurs when one of the parties to the contract does not fulfill its obligations.  Common examples of breaches include non-payment of rent, failure to maintain the premises, early termination without cause, unlawful use of the space, breach of exclusive use clauses, and failure to make necessary repairs.  Here are seven (7) steps to handle a commercial lease breach:

1.  Review the Lease Agreement

The first step in handling any breach of contract situation is to review the contract itself, and in the case of a lease agreement, reviewing the lease agreement.  At this stage, you need to review the lease agreement to identify the specific breach(es), along with any dispute resolution procedure, default remedies, and notice requirements.  The information gathered at this stage will assist with the next steps.

2.    Give Written Notice of the Breach

The second step in handling a breach of commercial lease agreement is to give written notice of the breach to the tenant (or in some cases the landlord).  The notice should identify the nature of the breach, e.g., non-payment of rent, a deadline to cure the breach (if applicable), and state the consequences if the breach is not cured or fixed within the deadline.  Many commercial leases have notice provisions which require written notice to be given and a deadline, e.g., 10 days, to cure the breach, such as additional time to pay rent or in the case of a breach by the landlord, notifying the landlord of a repair prior to the withholding of rent.

3.    Negotiation

The third step in handling a breach of commercial lease agreement is negotiation, and this may include a required dispute resolution process, such as mediation or arbitration (mediation or arbitration may be required before the filing of a lawsuit).  Informal negotiation may also be helpful, especially if the breach can be cured through a payment plan, amending the lease, or a mutual termination agreement.

4.    File a Lawsuit

The fourth step in handling a breach of commercial lease agreement is to file a lawsuit, and this may include a forcible entry and detainer (FED) action, also called an eviction, if the lease allows that, especially for non-payment of rent.  A lawsuit is filed by filing a petition which identifies the existence and terms of the lease, how the other party breached the lease, the amount of damages, and any other legal relief you might be seeking, such as the eviction of the tenant.  Once the lawsuit is filed, the defendant must be served and then has twenty (20) days to file an answer as a response to the lawsuit before proceeding further.

5.    Discovery

The fifth step in handling a breach of commercial lease agreement is the discovery process.  The discovery process is divided into two different parts: written discovery and depositions.  Written discovery includes in this instance requests for documents such as lease documents, correspondence between the parties, financial records, inspection reports, and maintenance logs.  Depositions are sworn testimonies which are held in private offices with a court reporter taking the transcript.

6.    Pre-Trial Motions and Settlement

The sixth step in handling a breach of commercial lease agreement is the pre-trial motions stage, which also includes pre-trial settlement negotiations.  During the earlier discovery stage, one of the parties will ask the Court to enter a Scheduling Order and set the case for Pre-Trial Conference.  The same Scheduling Order will also create deadlines to complete the discovery process, and provide a deadline for pre-trial, or “dispositive” motions, also known as motions for summary judgment.  A motion for summary judgment is a request for the court to rule in favor of one party without a trial if there is no genuine issue of material fact.  A party to the lawsuit might also file a motion to exclude evidence at trial, which is called a motion in limine.  The Court also usually orders the parties to mediation before the pre-trial conference, if mediation has not already been attempted.

7.    Trial

The seventh step in handling a breach of commercial lease agreement is trial.  If settlement is not reached through mediation, or resolution is not reached through a motion for summary judgment (if granted, a motion for summary judgment can end the case), the lawsuit will proceed to trial.  The trial will either be a bench trial tried to the judge, or a jury trial.  In Oklahoma, a party requesting a jury trial is required to pay a jury trial fee of $349.00.  During the trial, the parties will present their arguments, present their evidence to the court, and examine witnesses.  At the close of the trial, either the judge or jury will render a verdict that determines the outcome of the case.

Thinking about starting a small business?  Or maybe your small business is having issues with contracts, leases, business partners, collection issues, or experiencing other barriers to growth?  Please contact me at [email protected] to schedule a FREE strategy session.