If you’ve ever signed a commercial lease for office, retail, or warehouse space, you’ve almost certainly encountered CAM charges — short for Common Area Maintenance. These are the costs landlords pass on to tenants to cover the upkeep of shared spaces like parking lots, lobbies, landscaping, and hallways. One of the most financially consequential terms in any CAM caps commercial lease negotiation is whether the cap is structured as cumulative or non-cumulative — a distinction that can have a dramatic effect on what you actually pay over the life of your lease. Understanding it before you sign is one of the most important protections available to a business tenant.

CAM Caps Commercial Lease Basics: What Do They Cover?

CAM expenses fall into two broad categories. Controllable expenses are costs the landlord has direct influence over — things like janitorial services, landscaping, and parking lot maintenance. Uncontrollable expenses are those dictated by outside forces, like property taxes and building insurance.

CAM caps typically apply only to the controllable portion. They set a ceiling on how much your share of those expenses can increase from one year to the next — commonly somewhere in the range of 3% to 10% annually, depending on what’s negotiated. The Building Owners and Managers Association (BOMA) and other industry organizations have long recognized CAM expense structure as one of the most negotiated and consequential elements of any commercial lease.

The cap percentage itself is only half the story. Whether that cap is structured as cumulative or non-cumulative is the detail that determines how much protection you actually have.

How a Cumulative CAM Cap Works

Under a cumulative CAM cap, any unused portion of the cap in a given year carries forward and can be used by the landlord in future years.

Here’s a simple example. Suppose your lease includes a 5% annual cumulative CAM cap, and your controllable CAM expenses in Year 1 are $100,000. In Year 2, actual expenses only increase by 2% — well under the 5% cap. That unused 3% doesn’t disappear. The landlord banks it. In Year 3, if expenses spike by 7%, the landlord can pass on up to 8% (the current year’s 5% cap plus the 3% carried forward from Year 2).

For tenants, this creates a meaningful risk: even in years when costs are well-managed, the cap doesn’t actually reset. You could face a larger-than-expected increase in a future year because of prior years’ unused capacity accumulating quietly in the background.

Landlords generally favor cumulative CAM caps because they preserve maximum flexibility to recover real cost increases over time.

How a Non-Cumulative CAM Cap Works

A non-cumulative CAM cap works differently — and from a tenant’s perspective, more predictably. Each year, the cap is applied fresh, based only on the prior year’s actual expenses. Unused capacity does not carry forward. What wasn’t used is simply gone.

Using the same example: if your 5% non-cumulative cap allows for up to $105,000 in Year 2 but the landlord only charges $102,000, Year 3’s cap is calculated based on $102,000 — not the full $105,000 ceiling. There is no catch-up mechanism.

This structure gives tenants a clearer picture of their maximum exposure each year. Budgeting becomes more reliable because there are no hidden reserves building up that could result in a surprise increase later in the lease term.

Tenants generally prefer non-cumulative caps, as they want to budget and avoid unexpected increases in CAM expenses. That preference is well-founded — over a five- or ten-year lease, the financial difference between the two structures can be substantial.

Why the Difference Matters More Than Most Tenants Realize

On paper, cumulative and non-cumulative caps can look nearly identical in the early years of a lease — especially when actual expenses stay close to the cap limit each year. The divergence tends to show up in years when costs are lower than expected, followed by a year when they spike.

Consider a tenant paying $100,000 in controllable CAM expenses with a 5% annual cap. If actual expenses increase by only 2% for two consecutive years, the cumulative cap structure allows the landlord to recover up to 11% in the third year (5% current cap plus 3% from Year 2 plus 3% from Year 1 banked). Under a non-cumulative structure, that same tenant would never face more than a 5% increase in any single year, regardless of what happened in prior years.

Over a multi-year lease, that gap compounds. And for businesses with tight margins — restaurants, retailers, medical practices — unexpected CAM increases mid-lease can create real operational stress.

What to Look for in Your Lease Language

CAM cap provisions are rarely written in plain English. The language in your lease may not use the words “cumulative” or “non-cumulative” directly. Instead, watch for phrases like:

• “on a cumulative basis” — signals a landlord-favorable structure where unused cap carries forward
• “year-over-year” versus “year-over-base” — these describe how the cap is calculated each period and can change the math significantly
• “controllable expenses” — confirms what’s included in the cap and what’s excluded

It’s also worth noting that even within non-cumulative caps, there are variations. Some are calculated as a percentage of the prior year’s actual expenses; others use the prior year’s capped amount as the starting point. These distinctions sound minor but can produce meaningfully different numbers by Year 5 of a lease.

The cap type is one of the most financially significant negotiating points in any NNN or modified gross lease — and it often receives far less attention than base rent.

CAM Caps Commercial Lease Takeaway: Don’t Let the Details Decide for You

CAM caps commercial lease terms are not a minor administrative detail. They are a core financial term that determines how much cost exposure a tenant carries over the full lease term. A well-negotiated non-cumulative cap can save a business tens of thousands of dollars compared to a cumulative structure — even at the same cap percentage.

If you are reviewing a commercial lease, renewing an existing one, or negotiating new terms, understanding exactly how your CAM cap is structured — and what it will mean for your real estate costs year over year — is essential due diligence.

Have questions about your commercial lease?

Brent A. Levison, P.A. has over 25 years of experience guiding business owners and tenants through the complexities of commercial real estate transactions in Florida, New York, New Jersey, and Ohio. Whether you’re entering a new lease or renegotiating existing terms, our firm can help you understand what you’re agreeing to — before you sign.

Contact us today to schedule a consultation.

The information in this article is provided for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please consult a qualified attorney.

The post CAM Caps Commercial Lease Guide: Cumulative vs. Non-Cumulative first appeared on Brent Levison.

If you lease office space, retail storefronts, warehouse facilities, or any other commercial property in Florida, you’ve likely noticed a line item on your rent invoices labeled “sales tax.” For decades, Florida’s commercial rental sales tax held the distinction of being the only one of its kind in the country — a burden that added anywhere from 2% to 4.5% (plus local county surtaxes) on top of every lease payment. That reality is finally changing.

Here’s what Florida commercial tenants and business owners need to understand about where things stand in 2026.

How Florida’s Commercial Rental Sales Tax Worked

Florida’s commercial rental sales tax applied to the total rent paid for the privilege of occupying commercial real property. That included offices, retail spaces, warehouses, self-storage facilities, and other business premises. Landlords were responsible for collecting the tax from tenants and remitting it to the Florida Department of Revenue.

The tax was calculated on gross rent — meaning it applied not just to your base rent but to the total consideration you paid for the right to occupy the space, which could include certain additional charges depending on how your lease was structured.

For years, this created a real cost disadvantage for Florida businesses compared to competitors operating in other states. A company paying $20,000 per month in commercial rent, for example, was also paying several hundred dollars per month purely in state and local sales tax — money that had no equivalent in 49 other states.

Commercial Rental Sales Tax Rate History: A Long Road Down

Florida has been gradually reducing this tax for years, reflecting ongoing recognition that it placed Florida businesses at a competitive disadvantage:

• Pre-December 2023: The state sales tax rate on commercial rent stood at 4.5%
• December 2023: A reduction brought the rate down
• June 1, 2024: The state rate dropped to 2%, on top of applicable county discretionary surtaxes ranging from 0.5% to 2.0%

Even at 2%, Florida commercial tenants were still paying a tax no other state imposed. That’s why the Florida Legislature ultimately moved toward full repeal.

The Repeal: What Has Changed (and What Hasn’t Yet)

Legislation passed by the Florida Legislature — HB 7031 — has set in motion the full repeal of the commercial rental sales tax, permanently removing it from Florida statutes. This is a significant development for any business that leases commercial space in the state.

However, the timing of when the repeal applies to your specific payments matters greatly. Under Florida law, the tax obligation is generally tied to the rental period the payment covers, not necessarily the date the payment is made. This distinction has real practical consequences:

• Rent attributable to periods before the repeal’s effective date remains taxable, even if the payment is made after that date.
• Rent attributable to periods on or after the repeal’s effective date is no longer subject to the state sales tax.

If your lease spans the transition period, you and your landlord will need to clearly allocate which portion of each payment covers which rental period to determine the correct tax treatment.

Local Surtaxes: The County-Level Layer

Even as the state-level tax has been reduced and repealed, Florida counties have historically imposed their own discretionary sales surtax on top of the state rate. These county surtaxes varied widely — from 0.5% to 2.0% — depending on where your commercial property is located.

The repeal legislation addresses this layer as well, with provisions aimed at preempting local governments from continuing to impose similar taxes. That said, it’s worth reviewing your lease and your invoices carefully to confirm that your landlord’s billing reflects the current law in your county.

What This Means for Your Lease Agreement

Leases are legal contracts, and a change in law doesn’t automatically rewrite the language in your existing agreement. Here are a few practical areas worth paying attention to:

Lease language around taxes. Many commercial leases include provisions that address “taxes” or “additional charges” broadly. Some leases require tenants to pay any taxes imposed on the rent. If the sales tax has been eliminated, tenants paying under these clauses should confirm whether their total payment obligation has changed accordingly.

Rent invoicing. Some landlords may continue invoicing based on old templates or may not immediately update their billing systems. Tenants should review their invoices and compare them against the current law.

New leases going forward. If you’re negotiating a new commercial lease now or in the near future, the absence of the sales tax line item changes the economics of your deal. Understanding the total cost of occupancy — including any remaining transitional tax obligations — is an important part of your lease analysis.

Why This Matters Beyond the Invoice

The elimination of Florida’s commercial rental sales tax is more than a line-item change. For businesses with significant real estate footprints, the cumulative savings can be substantial. Consider a tenant paying $50,000 per month in gross rent — at a combined state and local rate of 3%, that’s $1,500 per month, or $18,000 per year, that previously went to sales tax. Multiply that across multiple locations or a multi-year lease, and the impact becomes meaningful.

For businesses evaluating new locations, expansions, or lease renewals in 2026, understanding the updated tax picture is a relevant part of occupancy cost analysis — and it makes Florida a more attractive market than it was just a few years ago.

Conclusion: Changes This Significant Deserve Careful Review

Florida’s commercial rental sales tax has been a unique burden on businesses leasing commercial space in the state for over 50 years. Its phasedown and repeal represent a genuine shift in the cost of doing business in Florida. But with any major legal change, the details — timing, lease structure, county-level rules, and how your specific agreement is written — determine how the change actually affects your bottom line.

If you have an existing commercial lease, are negotiating a new one, or simply want to understand how these changes interact with your business’s real estate obligations, a conversation with an experienced commercial real estate attorney can help you navigate the specifics with clarity.

Ready to talk through your commercial lease situation?

Brent A. Levison, P.A. has over 25 years of experience representing business owners and tenants in Florida commercial real estate matters. Whether you’re reviewing an existing lease, entering into a new one, or have questions about how recent legal changes affect your obligations, our firm is here to help.

Contact us today to schedule a consultation and get the clarity your business deserves.

The information in this article is provided for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please consult a qualified attorney.

The post Florida’s Commercial Rental Sales Tax — What Tenants Need to Know in 2026 first appeared on Brent Levison.

Here is a breakdown of the most important provisions to focus on before you sign.

1. Franchisor Lease Rider Requirements

Most franchisors require a lease rider or addendum that gives them specific rights in the real estate. These terms are typically non-negotiable and must be reconciled with the landlord’s standard form lease.

Key provisions usually include the franchisor’s right to receive default notices directly, the right to cure tenant defaults to keep the store open, step-in rights if the franchisee fails, and approval rights over any alterations, signage, or design changes.

Understanding what your franchisor requires before you negotiate with the landlord will save you significant time and legal costs.

2. Use Clause and Brand Standards

Your lease must permit you to operate the franchised concept exactly as required by the franchisor. A use clause that is too narrow — or too broad — can create compliance issues down the road.

Pay attention to whether the permitted use in the lease matches the franchise system’s requirements, whether exclusive use protections are available, and whether the lease allows for the build-out, signage, and equipment layout your franchisor requires.

3. Rent Structure and Operating Expenses

CAM charges (Common Area Maintenance), taxes, and insurance pass-throughs can significantly impact your unit economics. Many franchisees focus only on base rent and overlook these costs — sometimes with serious financial consequences.

Key issues to negotiate include the definition and exclusions of CAM charges, caps on controllable CAM increases, audit rights, and how your proportionate share of expenses is calculated.

4. Landlord Work, Tenant Work, and Delivery Conditions

Franchise build-outs are expensive and time-sensitive. Your lease should clearly define what condition the landlord must deliver the space in, with specific timelines and remedies if there are delays.

Make sure the work letter coordinates with your franchisor’s design requirements, and negotiate for early access rights so you can begin fixturing and training before the official rent commencement date.

5. Personal Guaranty and Security Requirements

Franchisees are frequently required to provide personal guaranties, letters of credit, or security deposits. Before agreeing to these terms, evaluate whether burn-off provisions are available (where the guaranty reduces over time), whether there are caps on your personal liability, and whether the guaranty terms align with what the franchisor requires.

6. Assignment and Transfer Rights

Your ability to sell the business depends on your ability to transfer the lease. If the landlord can unreasonably block an assignment, it can seriously limit your exit options and the value of your franchise.

Ensure the lease permits assignment in connection with a sale of the franchised business, that landlord consent cannot be unreasonably withheld, and ideally that you are released from personal liability upon a completed assignment.

7. Default, Remedies, and Cure Rights

A lease default can trigger termination of both the lease and your franchise agreement — a catastrophic outcome for any franchisee. Protecting yourself requires extended cure periods, clear notice requirements, and franchisor cure rights that allow the brand to step in before the lease is terminated.

8. Term, Renewal Options, and Relocation Rights

Your lease term must be long enough to satisfy your franchisor’s requirements and to justify the cost of the build-out. Negotiate for multiple renewal options at fair market rent and limit the landlord’s ability to relocate you within the property without adequate compensation.

9. Operating Requirements and Continuous Operation Clauses

Franchisors require continuous operation. Landlords often do too. Make sure your lease includes reasonable flexibility for remodels, temporary closures, and force majeure events — and that dark store penalties are limited or eliminated.

10. Insurance, Indemnity, and Risk Allocation

Your lease insurance requirements must align with your franchisor’s insurance requirements and your actual coverage. Avoid broad indemnities that shift excessive risk onto you, and ensure waivers of subrogation are reciprocal.

11. Coordination With the Franchise Agreement

Perhaps the most overlooked issue in franchise leasing: the lease and the franchise agreement must not conflict with each other. Misaligned terms, renewal periods, assignment mechanics, or default triggers can create serious legal and operational problems.

An experienced attorney will review both documents together — not in isolation — to ensure they work in your favor.

Get Legal Help Before You Sign

Franchise lease agreements are among the most complex commercial real estate documents a business owner will encounter. The stakes are high — your personal assets, your investment, and your franchise license can all be affected by the terms you agree to.

Brent Levison has extensive experience in franchise and commercial law. If you are negotiating a franchise lease or need a review before signing, contact us today for a consultation.

The information in this article is provided for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please consult a qualified attorney.

The post Important Franchise Lease Agreement Terms Every Franchisee Should Know first appeared on Brent Levison.

In a field where predictability, efficiency, and strategic clarity matter, flat fees create a cleaner, more professional framework for legal services.

No Surprises, No Anxiety

Clients appreciate knowing the cost upfront. There are no surprises, no anxiety about running clocks, and no hesitation to pick up the phone for fear that a six-minute increment will appear on the next invoice.

This transparency builds trust — and trust is the foundation of any long-term advisory relationship.

Expertise Is Rewarded, Not Penalized

For attorneys, flat-fee billing rewards expertise rather than time spent. A seasoned commercial leasing attorney may complete a task in a fraction of the time it would take a generalist — yet hourly billing perversely penalizes that efficiency.

Flat fees flip the model. Mastery and experience become assets, not liabilities. Attorneys can focus on delivering high-quality work, strategic guidance, and thoughtful negotiation rather than tracking time entries or justifying hours. This reduces administrative burden, minimizes billing disputes, and allows lawyers to operate more like business partners than service vendors.

Better Communication, Better Outcomes

Flat-fee structures encourage better communication. When clients know a call or email won’t trigger additional charges, they engage earlier and more openly. That leads to fewer misunderstandings, better-informed decisions, and a smoother transaction process.

In commercial leasing — where timing, leverage, and clarity of terms can materially affect outcomes — this open dialogue is invaluable. Attorneys gain a more complete picture of the client’s goals, risk tolerance, and operational needs, enabling more tailored and effective representation.

Operational Stability for Everyone

From a business perspective, flat-fee billing creates operational stability. Attorneys can forecast revenue more accurately, streamline workflows, and design repeatable processes that improve quality and consistency.

Clients benefit because it produces faster turnaround times, clearer deliverables, and a more predictable experience. The model also reduces friction at the end of a matter — instead of debating time entries, both sides can focus on closing the deal and planning next steps.

A Modern, Client-Centric Approach

Flat-fee billing reflects a modern approach to legal services. It respects the client’s need for budget certainty and the attorney’s need to be compensated for expertise rather than hours.

In commercial leasing — where the value lies in precision, negotiation strategy, and risk mitigation — flat-fee billing creates a healthier, more aligned, and more efficient relationship for everyone involved.

Work With an Attorney Who Values Your Time and Budget

If you are navigating a commercial lease negotiation and want transparent, predictable legal fees, Brent Levison offers flat-fee structures designed to give you clarity from day one.

Contact us today to discuss your leasing needs.

The information in this article is provided for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please consult a qualified attorney.

The post Why Flat-Fee Billing Works Better for Commercial Real Estate Leasing first appeared on Brent Levison.

Here’s what you need to know.

What Is a Franchise Lease Agreement?

A franchise lease agreement is a commercial lease specifically designed for a franchised business. It governs the physical location where the franchisee operates — but unlike a standard retail lease, it layers in requirements and protections from the franchisor as well.

It is not the same as the franchise agreement, which covers brand rights, royalties, and training. The franchise lease is strictly about the real estate.

The Three Parties Involved

One of the key things that sets a franchise lease apart from a standard retail lease is the number of parties involved:

• Landlord — the property owner
• Franchisee — the tenant operating the business
• Franchisor — the brand owner with approval and control rights over the lease

This three-party dynamic creates a more complex negotiation process. The franchisor’s interests and the landlord’s interests don’t always align — and the franchisee is often caught in the middle.

How Franchise Leases Differ From Standard Retail Leases

Common Franchisor Lease Rider Provisions

Most franchisors require a lease rider or addendum that grants them specific protections, including:

• The right to receive notices of default directly from the landlord
• The right to cure tenant defaults to keep the location open
• The right to assume the lease if the franchisee fails
• The right to assign the lease to a new franchisee
• Restrictions on altering the premises without franchisor approval

These provisions are designed to protect the franchisor’s brand continuity — but they can also limit your flexibility as a franchisee.

Who Signs the Franchise Lease?

In most cases, the franchisee signs the lease directly as the tenant. In some systems, the franchisor signs a master lease and subleases to the franchisee — but this is less common.

Franchisees are frequently required to provide personal guaranties, even when operating through an LLC or corporation. This means your personal assets could be on the line if the business fails.

Why Franchise Lease Agreements Matter

A poorly negotiated franchise lease can have serious consequences:

• Increased personal liability
• Higher operating costs (CAM charges, taxes, build-out requirements)
• Limited exit options if you need to sell or close
• Conflicts with franchisor requirements
• Risk to your franchise license itself

Negotiating a franchise lease requires balancing the demands of both the landlord and the franchisor — while protecting your own interests as the operator.

Get Legal Guidance Before You Sign

Franchise lease agreements are complex documents with long-term financial and legal implications. Before signing, it’s strongly recommended to work with an attorney who understands both commercial real estate and franchise law.

Brent Levison has extensive experience in franchise and commercial law. If you have questions about a franchise lease agreement or need guidance before signing, contact us today.

The information in this article is provided for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please consult a qualified attorney.

The post What Is a Franchise Lease Agreement? A Complete Guide for Franchisees first appeared on Brent Levison.

A lease is not just a legal document. It is a business instrument that directly affects profitability, flexibility, and day-to-day operations. When an attorney approaches a lease without a deep grasp of how the client actually functions, the negotiation becomes a technical exercise rather than a strategic one. The result is often a lease that is legally sound but operationally flawed.

Every Business Has Unique Needs

Every business has unique drivers: customer flow, staffing patterns, delivery schedules, storage needs, regulatory constraints, branding requirements, and growth plans. These factors dictate how a space must function.

A medical practice may need after-hours access, specialized build-outs, and strict control over neighboring uses. A restaurant may require venting rights, grease trap access, and predictable delivery logistics. A retailer may depend on visibility, signage, and co-tenancy protections.

Without understanding these nuances, an attorney cannot identify the clauses that matter most — or the risks that could quietly undermine the business.

Understanding Risk Tolerance Shapes Strategy

Listening also uncovers the client’s risk tolerance. Some clients prioritize flexibility and exit rights. Others value stability and predictable occupancy costs. Some are willing to invest heavily in improvements — others need landlord contributions to make the deal viable.

These distinctions shape negotiation strategy. A lawyer who listens can tailor the approach — pushing hard where the client needs protection and conceding where the client sees limited value. This avoids unnecessary conflict and keeps negotiations focused on what truly matters.

Anticipating Problems Before They Arise

Understanding the client’s operations also allows the attorney to anticipate issues the client may not yet see. A sophisticated leasing lawyer can translate business needs into precise, enforceable lease language — but that translation is only possible when the attorney has a full picture of how the business works.

Listening turns the attorney into a strategic advisor rather than a document reviewer.

Listening Builds Long-Term Trust

Moreover, listening builds trust. Clients feel heard, understood, and supported. They are more likely to share concerns early, ask questions freely, and rely on the attorney as a partner in the process.

This leads to better decisions, fewer surprises, and a smoother negotiation. It also strengthens the long-term relationship — critical in a field where clients often return for renewals, expansions, relocations, and new ventures.

The Lease Should Serve the Business

Commercial leasing is not about filling in forms or redlining boilerplate. It is about aligning the lease with the client’s business objectives so the space becomes an asset rather than a constraint.

When an attorney listens deeply and understands the client’s operational goals, the negotiation becomes more strategic, the protections more meaningful, and the final lease more supportive of long-term success.

Work With an Attorney Who Actually Listens

Brent Levison brings extensive experience in commercial real estate leasing — and a commitment to understanding your business before picking up a pen.

Contact us today to discuss your leasing needs.

The information in this article is provided for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please consult a qualified attorney.

The post Why Listening Is the Most Important Skill in Commercial Lease Negotiation first appeared on Brent Levison.

In its 35-page ruling, the court overturned its landmark 1984 decision in Chevron v. Natural Resources Defense Council, which had given rise to the “Chevron doctrine.” That doctrine had required courts to uphold an agency’s reasonable interpretation of an ambiguous statute. But in the new ruling, the court, led by Chief Justice John Roberts, rejected the Chevron doctrine as “fundamentally misguided.”

Justice Elena Kagan dissented, warning that the court’s decision would cause a “massive shock to the legal system.” She was joined in her dissent by Justices Sonia Sotomayor and Ketanji Brown Jackson.

When the Chevron decision was first issued over 40 years ago, it was not seen as particularly consequential. But it eventually became one of the most important rulings on federal administrative law, cited by federal courts more than 18,000 times. While the decision was initially welcomed by conservatives, it later became a target for those seeking to limit the power of the administrative state.

The Chevron decision, which upheld the Reagan-era EPA’s interpretation of the Clean Air Act that eased emissions regulations, was initially praised by conservatives. However, the ruling later became a target for those seeking to limit the administrative state’s power. These critics argued that courts, not federal agencies, should determine the meaning of the law.

In his opinion, Chief Justice Roberts rejected the idea that agencies are better suited than courts to resolve ambiguities in federal laws. He emphasized that Congress expects courts to handle technical statutory questions, with the benefit of briefing from the parties and “friends of the court.”

Moreover, Roberts noted that even if courts should not defer to an agency’s interpretation of an ambiguous statute, they can still consider that interpretation under the Skidmore deference doctrine.

Finally, Roberts characterized the Chevron doctrine as “unworkable” and not worthy of being upheld under the principle of stare decisis. He argued that it is too difficult to determine whether a statute is truly ambiguous, a key criterion for applying the Chevron framework.

The post Chevron Doctrine Reversed: Supreme Court Decision Limits Federal Agency Power first appeared on Brent Levison.

In Florida, the lease, rental, or licensing of commercial real property is subject to state sales tax. This tax encompasses any payment made for the privilege to occupy or utilize the property, including base rent, additional rental fees, and other mandatory payments specified in the lease agreement. Any lessor of real estate must register with the Florida Department of Revenue before engaging in business or entering into a commercial lease.

Over the years, the sales tax rate on commercial rentals in Florida has gradually decreased. Currently set at 4.5%, the state tax on commercial property rentals will be further reduced to 2% effective June 1, 2024. Initially slated for July 1, 2024, this reduction aims to benefit businesses operating in Florida.
Despite the reduction in the state tax rate, counties that impose a surtax will continue to apply it. In 2024, surtax rates vary from 0.5% to 1.5%, with the exception of Collier County, which eliminated the surtax by the end of 2023.

It’s essential to note that each commercial rental property location is considered a distinct entity and necessitates its own tax certificate. While Landlords or their representatives are usually responsible for registering, collecting, and remitting the tax, tenants may become liable for the tax if the landlord fails to meet these obligations. This scenario, known as use tax, may become a concern during a sales tax audit. Lessors and lessees of commercial rentals should carefully review lease agreements for clauses relating to sales taxes, including the tax base calculation and applicable tax rates.

The business rental tax, encompassing rentals of commercial office or retail spaces, warehouses, self-storage units, and mini-warehouses, does not cover sales and use taxes on parking lots, boat docks, and aircraft hangars, as separate regulations govern these categories.

The post Florida’s Reduced Commercial Rental Sales Tax first appeared on Brent Levison.

1. Definition of Hazardous Materials/Hazardous Substances

It’s important to have a clear definition of hazardous materials in the lease agreement. The definition should align with the applicable laws and regulations governing the use, storage, and disposal of hazardous materials. This will ensure the tenant’s compliance with environmental laws, minimize the risk of liability, and protect the property’s value.

2. Compliance with Environmental Laws

Commercial landlords need to ensure that their tenants are compliant with all applicable federal, state, and local environmental laws and regulations related to hazardous materials. The lease agreement should require tenants to obtain all necessary permits and licenses, regularly submit compliance reports, and maintain proper records. By doing so, landlords can protect themselves from potential fines, legal penalties, and reputation damage.

3. Allocation of Responsibilities

It’s essential to clearly allocate responsibilities between the landlord and tenant regarding hazardous materials present on the property. The lease agreement should outline which party is responsible for handling, storing, and disposing of hazardous materials, as well as any required cleaning and remediation. This will help avoid confusion and disputes regarding liability when it comes to hazardous materials on the property.

4. Indemnification and Insurance

Commercial landlords should protect their investments by requiring tenants to indemnify and hold them harmless from any liability resulting from hazardous materials on the property. Tenants should also be required to maintain adequate insurance coverage to cover any potential risks associated with hazardous materials. The insurance should include general liability and environmental impairment liability insurance.

5. Inspection and Remediation

Commercial landlords should have the right to inspect the property for potential hazardous materials and require remediation if necessary. The lease agreement should outline the process for inspections, remediation, and any associated costs. This will ensure that the property is properly maintained, comply with environmental laws, and preserve its value.

In conclusion, negotiating environmental matters such as hazardous materials provisions in retail and office leases requires careful consideration of the legal and environmental risks involved. Commercial landlords should be proactive in protecting their interests by carefully drafting lease agreements that allocate responsibilities, mitigate potential liabilities, and protect the value of their investments.

The post Top 5 Considerations for Commercial Landlords When Negotiating Hazardous Materials Provisions in a Retail or Office Lease first appeared on Brent Levison.

AI is the simulation of human intelligence by machines, especially computer systems. AI chatbots such as ChatGPT are a new technology that is rapidly transforming the internet industry and many job functions across all industries. Chatbots are computer programs designed to simulate conversations with human users and are already replacing human workers in the workplace.

Most of us have been using AI without knowing it. When drafting an email or text message and there are spelling/autocomplete suggestions for sentences, that is AI at work.

Members of the corporate world and Congress have recently expressed concerns about the dangers of AI. They are concerned about AI technologies causing harm, such as facial recognition, that can be used to violate privacy rights. Yet, as of today, no bill has yet been proposed in Congress to protect individuals from the potential harm caused by AI. The aged old problem remains with technology that most lawmakers are just now learning what AI is.

The Federal Trade Commission (FTC) has issued consent orders against companies that have used AI in deceptive ways. In one case, the FTC issued a consent order against a company that deceived consumers about its use of facial recognition technology and its retention of the photos and videos of users who deactivated their accounts.  The FTC has also proposed commercial surveillance rules to restrict the collection of data used in AI technology. 

The FTC has recently issued guidance warning advertisers not to make false or unsubstantiated claims about AI products. The FTC highlighted four major considerations: (1) do not exaggerate what your AI product can do; (2) do not promise that your AI product does something better than a non-AI product without adequate proof; (3) know about the reasonably foreseeable risks and impact of your AI product before putting it on the market (“If something goes wrong – maybe it fails or yields biased results – you can’t just blame a third-party developer of the technology. And you can’t say you’re not responsible because that technology is a ‘black box’ you can’t understand or didn’t know how to test”); and (4) consider whether a product actually uses AI. If a product is not actually AI-enabled, then do not claim that it is an AI product. Merely using an AI tool in the development process is not the same as the product having AI in it. The guidance concludes: “You don’t need a machine to predict what the FTC might do when those claims are unsupported.”

AI is currently being used in the legal industry in many ways, such as assisting with document processing and classification for a wide range of legal matters, including due diligence, contract and document review, contract management, and deal analysis.

This raises the optimistic question: Can AI replace attorneys?

Unfortunately, my answer is no. To the best of my knowledge, AI cannot (at least not yet) do the following, which are done and billed by attorneys:

• Confer with clients to determine their objectives and concerns
• Discern best strategies and avenues to be explored
• Determine what claims are being made in the advertising which require substantiation or confusion to consumers
• Review & Edit an agreement to advance the client’s interests
• Identify potential copyright, trademark and right of publicity issues and provide risk mitigation strategies 
• Provide a risk assessment to a client, such as the risk of a challenge by regulators, competitors or consumers
• Take into account a client’s risk tolerance when providing legal advice

Moreover, an AI chatbot cannot provide legal advice under the rules of professional conduct, meaning no protection of attorney-client privilege for any conversations that a client may engage with an AI chatbot.

Unfortunately for some, despite the advances being made by AI, including in the legal profession, currently, it is unlikely that AI will be able to replace the legal profession. There are differences between providing general legal information and delivering legal advice specific to a client’s needs. AI is adept at building on what has been done before but lacks the creativity and abstract thinking that are required for many legal needs. And some would argue that AI lacks the human touch (more than a lawyer) that embodies or at least creates the important attorney-client relationship and privileges.

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