Commercial Tenants Should Review Restrictions Before Signing Lease

San Antonio HOA Lawyer Trey Wilson wrote:

Restrictive covenants and Property Owners Associations that enforce them are generally associated with residential communities. However, many commercial developments, including strip centers and office complexes have a condominium ownership arrangement. Even where a multi-unit commercial development is owned by a single individual or entity, there usually exist shared "common areas," available for non-exclusive use by all tenants. Frequently, these commercial developments are governed by Restrictive Covenants (or a "Declaration") which limit the types and scope of activities permitted by Owners and Tenants in the development.

Properly-recorded Restrictive Covenants usually "run-with the land" and are applicable even where a Tenant has not been provided a copy. Commercial tenants sometimes enter into leases that expressly authorize them to conduct activities or engage in practices that are prohibited by the applicable covenants. While this situation sometimes arises as the result of unscrupulous acts by a Landlord, most often, the Lessor, himself, is unaware of the language of the Declaration -- especially if the landlord is simply an investor who has never occupied the property. Imagine the surprise of the Tenant who receives notification from the POA or a neighbor that their use of the leased premises is unauthorized and/or expressly prohibited by the Declaration!

To avoid this situation, commercial interests should insist on receiving and reading a copy of all applicable Restrictions PRIOR TO entering a lease, or investing in the build-out of a commercial property. The provisions of a lease will almost NEVER trump valid Restrictive Covenants, and ignorance of the contents of the Covenants is no excuse. To be sure that the intended use is not prohibited, a wise commercial tenant will contact an experienced lawyer to review the terms of the commercial lease, and to identify any prospective problems with applicable restrictions.