Commercial lease disputes are some of the most paper-intensive and operationally consequential cases this firm handles. The lease is usually a thick document with many cross-referenced provisions. Rent comes due every month. Services get delivered, property gets maintained. The breach affects ongoing business operations that cannot easily pause while litigation runs its course.
Texas law of commercial leases is a hybrid, partly statutory under Property Code Chapter 93, mostly contractual under whatever the lease itself says, with overlay from general Texas contract law. Unlike residential tenancies under Chapter 92, commercial leases give the parties wide latitude to bargain over terms, and courts enforce the lease as written when the provisions are clear.
This page covers the most common Texas commercial lease disputes and the framework for resolving them. For a deeper treatment of Texas landlord-tenant law generally, see our firm’s dedicated Dallas Landlord Lawyer site.
Default and cure
Most commercial lease disputes start with an alleged default. The analysis of whether default has occurred, and what cure rights the tenant has, runs through the specific lease provisions.
Monetary default. Failure to pay rent, CAM, NNN charges, late fees, or other monetary obligations when due. Most commercial leases provide for a short cure period after written notice (often 3-10 days) before the landlord can pursue further remedies.
Non-monetary default. Breach of operational covenants, failure to maintain, failure to operate during required hours, breach of use restrictions, failure to maintain insurance. Cure periods for non-monetary defaults are typically longer (often 30 days plus reasonable additional time for cures that cannot reasonably be completed in 30 days).
Bankruptcy and insolvency. Many commercial leases include specified bankruptcy defaults. The Bankruptcy Code preempts some state law remedies once a tenant files, and the lease provisions have to interact with sections 365 and 502(b)(6) of the Bankruptcy Code in tenant insolvency cases.
Whether default has occurred is often the threshold legal issue. Get it wrong and the case turns. Landlords who claim default without satisfying notice and cure provisions find their enforcement actions dismissed and a wrongful-default counterclaim staring back at them.
Lockouts and other self-help remedies
Texas Property Code section 93.002 governs commercial lockouts. The statute permits a commercial landlord to lock a defaulting tenant out of leased premises, but only under specific conditions.
The lease must expressly authorize the lockout. Lockouts are not a default landlord remedy under Texas law; they exist only where the lease creates them.
The landlord must provide notice before the lockout. The notice requirements include placing written notice on the front door of the premises and providing contact information for the tenant to retrieve keys.
The lockout must be conducted properly. The landlord cannot use it to harass the tenant, retain personal property beyond what the lease permits, or accomplish other unauthorized purposes.
Unauthorized lockouts under section 93.002(g) expose the landlord to actual damages, one month’s rent or $500 (whichever is greater), reasonable attorney’s fees, and court costs. Tenants on the receiving end of an unauthorized lockout have meaningful leverage.
The mitigation duty
Texas Property Code section 91.006 requires landlords to make reasonable efforts to mitigate damages when a tenant breaches the lease and abandons the premises. The duty applies to commercial leases and cannot be waived.
What counts as reasonable mitigation depends on the property and market. Listing the premises with commercial real estate professionals, advertising the property, accepting reasonable substitute tenants, these are typical mitigation efforts. Refusing to consider obviously qualified substitute tenants or demanding above-market rents for the relet is not.
The mitigation defense has to be pleaded by the tenant. Once pleaded, the landlord bears the burden of proving its mitigation efforts were reasonable. Failure to satisfy the duty does not defeat the entire claim but reduces the recoverable damages by what reasonable mitigation would have achieved.
CAM, NNN, and operating expense disputes
Common area maintenance (CAM) charges and triple net (NNN) expense pass-throughs are a recurring source of commercial lease litigation. The lease typically provides:
- A definition of what expenses are included
- A mechanism for calculating the tenant’s pro rata share
- An annual reconciliation between estimated and actual expenses
- Audit rights (sometimes)
- Caps or floors on certain expense categories
Disputes arise over what expenses are properly included, whether the landlord allocated correctly, whether the tenant got proper backup, and whether the tenant’s audit rights were honored. The lease language controls. Courts read the operating expense provisions strictly, particularly when the lease is between sophisticated commercial parties represented by counsel.
Assignment, subletting, and recapture rights
Almost every commercial lease contains restrictions on the tenant’s ability to assign the lease or sublet the premises. The restrictions vary widely:
Absolute prohibition. No assignment or subletting without landlord consent, which may be granted or withheld in the landlord’s sole discretion. Texas enforces these as written.
Reasonable consent. No assignment or subletting without landlord consent, not to be unreasonably withheld. The reasonableness standard imposes a real limit on the landlord’s discretion.
Permitted assignments. Specified categories of assignment permitted without consent, affiliates, successors in business combinations, related entities.
Recapture rights. Some leases give the landlord the right to recapture the space rather than approve an assignment, taking the premises back and ending the tenant’s obligations.
Disputes over assignment provisions are common in business combinations, restructurings, and sales of tenant businesses. Misreading the assignment provisions can create both inadvertent defaults and unnecessary deal blockages.
Holdover tenants
A tenant that remains in possession after the lease expires is a holdover tenant. Most commercial leases contain specific holdover provisions, typically allowing the landlord to either treat the holdover as creating a month-to-month tenancy at an elevated rent or to evict the tenant and pursue damages.
The Texas Property Code framework for holdover commercial tenants is in chapters 91 and 92. The lease usually controls because the parties have addressed the holdover scenario specifically.
Disputes arise over whether the landlord has elected to accept the holdover (creating a month-to-month tenancy) or to evict (with damages claim for unauthorized possession). Conduct counts here, not just words. Accepting rent at the new rate generally implies acceptance of the new tenancy.
Remedies in commercial lease cases
Commercial lease litigation typically involves:
- Recovery of past due rent and other charges. Direct contract damages for unpaid amounts.
- Acceleration. Many commercial leases include acceleration clauses making the entire remaining rent due on default, often subject to mitigation credit.
- Possession. Either through eviction proceedings under Property Code Chapter 24 (forcible detainer) for cases where possession is the primary issue, or as part of broader contract litigation.
- Attorney’s fees. Either contractual (most well-drafted commercial leases include fee-shifting) or statutory under Chapter 38.
- Statutory damages under Chapter 93. Where applicable to improper landlord conduct.
Forcible detainer proceedings under Property Code Chapter 24 move quickly and are limited to possession. Money damages claims are typically pursued in separate district court litigation or through counterclaims in justice court that exceed jurisdictional limits.
When the commercial lease case connects to other practices
Commercial lease litigation often involves:
- Bankruptcy and insolvency. When the tenant or guarantor approaches insolvency, the case interacts with our bankruptcy and collections practices.
- Guaranty enforcement. Personal or corporate guaranties of commercial leases generate their own enforcement actions. See Guaranty Enforcement and Defense.
- Commercial property disputes. Lease cases sometimes involve related landlord-tenant issues handled in depth at our Dallas Landlord Lawyer site.
- Collections. Money judgments on lease cases connect to the firm’s Texas Collections practice.
The lease decides most of this
We read the lease closely before recommending anything, because it controls most of the dispute and a surface read misses the provisions that change the analysis. We follow the notice and cure procedures to the letter, since skipping a step hands the other side a counterclaim and following them protects the case. And we pursue Chapter 38 and contractual fee shifting in parallel, because most commercial lease disputes have more than one basis for recovering fees.
Landlord or tenant, the answer is usually already in the lease. Bring it, with every amendment, and we will tell you where you stand.
Frequently Asked Questions
What law governs commercial leases in Texas?
Texas Property Code Chapter 93 governs commercial tenancies, providing some baseline statutory rights and obligations. The lease itself controls most aspects of the relationship. Unlike residential tenancies under Chapter 92, commercial leases give the parties broad freedom to bargain over terms, and the lease language generally controls when not contrary to specific statutory requirements.
Can a Texas commercial landlord lock out a defaulting tenant?
Yes, in carefully limited circumstances. Texas Property Code section 93.002 allows commercial landlords to use lockouts to recover possession from defaulting tenants, but only when the lease expressly authorizes the lockout and only after specified notice procedures. Unauthorized lockouts expose the landlord to statutory damages, actual damages, and attorney's fees under section 93.002(g).
What is the landlord's duty to mitigate damages when a Texas commercial tenant breaches?
Texas Property Code section 91.006 requires landlords, including commercial landlords, to make reasonable efforts to relet the premises and mitigate damages when a tenant breaches and abandons the lease. The duty applies as a default rule and cannot be waived. The tenant has the burden of pleading the mitigation defense, but the landlord has the burden of proof on whether it satisfied the duty.
Can a commercial tenant assign or sublet the lease in Texas?
Depends on what the lease says. Most commercial leases contain assignment and subletting clauses that either prohibit assignment without landlord consent or impose specific conditions. Texas enforces these provisions as written. Lease provisions requiring landlord consent typically include a reasonableness standard for withholding consent, either expressly or by implication, but the level of discretion varies by lease.
What are CAM and NNN charges in a Texas commercial lease?
Common area maintenance (CAM) and triple net (NNN) provisions allocate operating costs of the leased property between landlord and tenant. CAM covers shared building expenses; NNN typically includes taxes, insurance, and maintenance passed through to tenants. Disputes over these pass-throughs are common, over whether specific expenses are properly included, whether the tenant has audit rights, and whether the landlord's calculations comply with the lease.