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Eminent domain laws in Arizona for 2024 continues to be a critical issue for property owners, understanding the legal expectations pertinent to these proceedings is increasingly vital.
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Arizona’s Eminent Domain Laws: What Every Landowner, Investor, and Developer Should Know
Arizona’s Eminent Domain Laws: What Every Landowner, Investor, and Developer Should Know 1920 1280 Gottlieb Law

Gottlieb Law, PLC provides this article for informational purposes only. Nothing herein creates an attorney–client relationship. You should not act on any of the information contained without consulting qualified legal counsel. Laws change over time, and you should seek legal advice about your specific situation.

Understanding Eminent Domain in Arizona

If you own property in Arizona or are planning to develop land, it’s important to understand how eminent domain works. In a fast-growing state, governments and certain private entities regularly acquire property for infrastructure, utilities, and other public purposes.

At its core, eminent domain is the power to take private property for a “public use,” so long as the owner is paid “just compensation.” This requirement comes from both the U.S. Constitution (Fifth Amendment) and the Arizona Constitution (Article 2, § 17).

Who Can Exercise Eminent Domain?

While eminent domain is most often associated with city, county, or state governments, Arizona law also authorizes certain private entities to use it when the legislature has granted the power. These include utility companies, railroads, and pipeline operators. The authority comes primarily from Arizona Revised Statutes §§ 12-1111 through 12-1129.

What Protections Do Landowners Have?

Property owners are not powerless. Arizona law sets out strict requirements to ensure fairness:

  • Public Use Requirement – The taking must be for a valid public purpose, such as roads, utilities, schools, or other community infrastructure.
  • Just Compensation – Owners must be paid fair market value for the property taken, which may include damages for partial takings.
  • Procedural Safeguards – Courts oversee the process to ensure compliance with statutory deadlines and constitutional protections.
  • Proposition 207 Protections (A.R.S. § 12-1134) – Arizona provides additional protection against “regulatory takings,” where land use restrictions reduce property value without a direct taking.

Why This Matters

Eminent domain is not rare in Arizona — it often arises in highway expansions, light rail projects, and utility easements. Understanding the process, the defenses available, and how compensation is calculated can make the difference between a fair resolution and a costly loss.

The Legal Landscape: What Authorizes Eminent Domain in Arizona?

Eminent domain in Arizona is governed by both the Arizona Constitution and a detailed statutory framework (A.R.S. §§ 12-1111 through 12-1129). These laws specify who may take property, under what circumstances, and what procedures must be followed.

Under the Arizona Constitution (Article II, § 17), property may be taken only for a public use and only if the owner is paid just compensation. Importantly, the Constitution makes clear that it is the courts—not lawmakers or agencies—that decide whether a use truly qualifies as “public.” This means property owners have the right to challenge not only the amount of compensation, but also the very legitimacy of the taking itself.

Arizona law also provides additional protection through the Private Property Rights Protection Act (Proposition 207, codified at A.R.S. § 12-1134). This statute requires compensation if new land-use regulations reduce a property’s fair market value, unless narrow exceptions apply. It also prevents condemnations that primarily benefit private parties.

The Process for Eminent Domain in Arizona

Arizona statutes require condemning authorities to follow a strict, step-by-step process. Any misstep can delay or even invalidate the taking:

  1. Resolution of Necessity – The government agency (or, in limited cases, a utility or special district) must adopt a formal resolution declaring the need for the property.
  2. Notice and Offer – The owner receives formal notice, along with a written offer based on an appraisal of fair market value.
  3. Negotiation – The parties may attempt to settle voluntarily.
  4. Court Filing – If no agreement is reached, the condemning authority files a complaint in superior court and deposits its estimate of just compensation.
  5. Early Possession – Once the deposit is made, the authority may take possession of the property before final judgment.
  6. Trial and Valuation – If unresolved, a jury (unless waived) determines just compensation, including damages for partial takings.
  7. Two-Year Bar on Refiling – If the case is dismissed before payment, the condemning authority cannot bring a new action for two years.

These safeguards ensure that property owners have multiple opportunities to contest both procedure and valuation.

What Counts as “Public Use” in Arizona?

Arizona’s definition of public use rests on three pillars:

  1. Arizona Constitution (Art. II, § 17): Prohibits takings for private use and requires judicial review of whether a claimed public purpose is valid.
  2. Proposition 207 (A.R.S. § 12-1134): Bars condemnations that primarily benefit private entities and provides compensation for certain regulatory takings.
  3. Arizona Eminent Domain Statutes (A.R.S. §§ 12-1111 et seq.): Establish procedures and reinforce that property may be taken only for authorized public uses.

An important case on this issue is Bailey v. Myers, 206 Ariz. 224, 76 P.3d 898 (App. 2003). There, the Arizona Court of Appeals struck down a proposed condemnation for a private retail redevelopment, holding that public benefits and characteristics must substantially predominate over private interests for a taking to qualify as public use under the Arizona Constitution.

Constitutional Foundation: Article II § 17

    • “No Private Use” Rule
      • Arizona’s Constitution provides some of the strongest property protections in the country. Article II, § 17 flatly prohibits taking private property for private use, except in narrow cases such as private ways of necessity or mining ditches. It also requires just compensation in money before a taking is effective. For corporate condemnors (other than municipal corporations), compensation must be paid in full, without offsets for “benefits” from the project.
  • Judicial Review Requirement
  • The final sentence of Article II, § 17 makes Arizona unique:  “Whenever an attempt is made to take private property for a use alleged to be public, the question whether the contemplated use be really public shall be a judicial question, and determined as such without regard to any legislative assertion that the use is public.”
  • This means courts, not legislatures or agencies, decide whether a use is truly public. Judicial review is independent and cannot be bypassed by legislative declarations. This principle was central in Bailey v. Myers, where the Arizona Court of Appeals invalidated a retail redevelopment taking because public benefits did not “substantially predominate” over private interests.
  • Historical Context
  • Arizona adopted this provision at statehood in 1912, reflecting deep mistrust of unchecked eminent domain power. Early cases such as Inspiration Consol. Copper Co. v. New Keystone Copper Co., 16 Ariz. 257, 144 P. 277 (1914), confirmed that Article II, § 17 must be read strictly to protect landowners, limiting private takings to the narrow exceptions expressly listed in the Constitution.

Statutory Safeguards

These constitutional limits are reinforced in Arizona’s eminent domain statutes (A.R.S. §§ 12-1111 to 12-1129). The statutes:

  • Define the permissible categories of public use;
  • Require a resolution of necessity before filing;
  • Allow early possession upon deposit of estimated compensation; and
  • Impose a two-year bar on refiling if a case is dismissed before compensation is paid.

Together, the Constitution and statutes create one of the most property-owner-protective eminent domain frameworks in the country.

Proposition 207: The Private Property Rights Protection Act (2006)

In 2006, Arizona voters approved Proposition 207 in response to Kelo v. City of New London (2005). Codified at A.R.S. § 12-1134, it provides that:

  • Takings for economic development are not public use. The statute expressly excludes general economic benefits such as higher tax revenue or jobs from qualifying as “public use.”
  • Regulatory takings are compensable. Landowners are entitled to just compensation if a new land use law reduces their property’s fair market value, unless the government issues a waiver or the regulation falls within limited exceptions (e.g., public health, safety, nuisance abatement).

This reform made Arizona’s eminent domain protections among the strongest in the nation.

Federal Precedents and Arizona’s Response

In Kelo v. City of New London, 545 U.S. 469 (2005), the U.S. Supreme Court held that a city may use eminent domain for a comprehensive economic-development plan, treating “public use” as a broad public-purpose inquiry with strong deference to legislative judgments. Arizona voters reacted swiftly: Proposition 207 (2006)—codified at A.R.S. §§ 12-1131–1138—explicitly excludes ‘public benefits of economic development’ from qualifying (see A.R.S. § 12-1136(5)).

For regulatory takings, Arizona courts primarily apply Ariz. Const. art. II, § 17 and A.R.S. § 12-1134, while federal precedents remain informative.

Practical Takeaways for Property Owners and Developers

  • For Property Owners: If a proposed taking primarily benefits a private developer, you may challenge it under Article II, § 17 and A.R.S. § 12-1134(A)(4). Early legal review of the condemnor’s “resolution of necessity” and appraisals can expose weaknesses in the public-use rationale.
  • For Developers and Municipalities: Ensure any project tied to condemnation has a clear public-use component (road, park, safety improvement). Where possible, rely on voluntary acquisitions (contracts, options) to avoid litigation risk.
  • For Land-Use Planning: Developers should evaluate potential Prop 207 regulatory-takings risks before launch. Municipalities can mitigate liability by offering waivers or variances rather than imposing regulations that reduce property values.

Valuation: What Counts as “Just Compensation”?

In Arizona, just compensation means the fair market value of your property on the date of the taking:

  • Fair Market Value: What a willing buyer would pay a willing seller in an open market.
  • Highest and Best Use: Compensation must reflect the most profitable legal use of the property, even if you’re not currently using it that way.
  • Project Influence Rule: The value cannot be inflated (or reduced) by the very project causing the taking.
  • Partial Takings: If only part of your land is taken, you may also recover severance damages—the loss in value to the remainder of your property.

Government appraisals often come in low. Property owners have the right to present their own expert valuations, and juries—not agencies—decide the final number if the case goes to trial.

Defenses Against Eminent Domain in Arizona

Landowners are not powerless. Arizona law gives you multiple avenues to fight back:

  • Challenge Public Use: Under Article II, § 17 and A.R.S. § 12-1134, courts—not agencies—decide whether a taking is truly for public use.
  • Question Necessity: You can argue the project could be built elsewhere or that the scope of land being taken is excessive.
  • Contest Valuation: You may reject the government’s deposit and demand a jury trial on just compensation.
  • Enforce Procedure: If the condemnor skips a statutory step—like notice, deposit, or a resolution of necessity—you may move to dismiss the action.

Strong procedural safeguards mean missteps by condemning authorities can delay or derail the taking entirely.

Examples of Eminent Domain in Arizona

Eminent domain shows up in many contexts:

  • Transportation: ADOT’s I-17 and Loop 202 expansions have required taking residential and commercial parcels.
  • Utilities: Water, electric, and gas corridors often affect rural and suburban landowners.
  • Flood Control: Maricopa County has condemned land for retention basins, levees, and emergency access.

These takings affect not only land, but also business operations, farming, and access rights, which can significantly increase compensation claims.

Why This Matters

By understanding valuation rules and defenses, landowners can avoid leaving money on the table and ensure condemnors meet every legal obligation.

What Developers and Investors Should Know

Eminent domain can sometimes play a role in making large-scale development possible—for example, when a city needs to build new roads, utilities, or drainage improvements tied to a project. But the law requires that the primary benefit remain with the public, not private investors. Developers should:

  • Structure carefully: Ensure the government—not the private project—is the direct beneficiary of any condemnation.
  • Avoid private-benefit takings: Lobbying for condemnations that primarily benefit a private project risks invalidation under the Arizona Constitution and the Private Property Rights Protection Act.
  • Plan for costs and delays: Appraisal disputes, court deposits, and potential challenges can affect project timelines.
  • Evaluate land-use risk: New overlays, rezonings, or infrastructure funding measures may trigger regulatory-takings claims under Proposition 207.

Early legal guidance can help developers reduce these risks and keep projects compliant.

Regulatory Takings: The Private Property Rights Protection Act

Eminent domain is not the only way property rights are impacted. Arizona’s Private Property Rights Protection Act (Proposition 207, 2006; A.R.S. § 12-1134) also protects owners from certain land-use regulations:

  • Compensation Right: If a newly enacted regulation reduces the property’s fair market value, the owner may demand compensation.
  • Waiver Alternative: Instead of paying, the government can grant a waiver, allowing the property to be used under prior rules.
  • 90-Day Response: After a property owner submits a written demand for compensation, the government has 90 days to either pay, repeal/amend the law, or issue a waiver. If the regulation still applies after 90 days, the owner may file suit

Limits: Some regulations are exempt, such as those addressing public health, safety, or nuisances, and owners must file within 90 days of the law’s enactment or application.

How Gottlieb Law Supports Clients

Whether defending against condemnation or structuring a complex development, Gottlieb Law’s attorneys can provide targeted counsel across Arizona real estate law.

  • For Property Owners: Guidance from early strategy through trial and appeal, ensuring just compensation and strict enforcement of procedural protections.
  • For Developers and Investors: Advice on public-private partnerships, land-use compliance, condemnation risks, and Proposition 207 assessments to keep projects on track.

The firm also handles zoning and leasing legal issues and offers comprehensive support for Arizona real estate clients.

Protect Your Arizona Property: Why You Need Skilled Eminent Domain Attorneys

Eminent domain and regulatory takings aren’t abstract legal issues—they affect homes, investments, and development projects across Arizona. The state’s Constitution and statutes give landowners unusually strong protections, but those protections only matter if you know how to assert them. From contesting whether a taking is truly for public use to challenging undervalued appraisals, every detail counts.

At Gottlieb Law, our attorneys focus on Arizona real estate and property law. We guide clients through Arizona real estate issues, which can include condemnation threats, valuation disputes, and regulatory takings claims, combining deep knowledge of Arizona’s real estate landscape with hands-on courtroom experience. Whether you’re facing a government demand or planning a project that could trigger land-use disputes, we help you protect your rights and move forward confidently.

Call Gottlieb Law today at 602-899-8188 or use our Contact Us page here to schedule your initial consultation.

This article is provided by Gottlieb Law, PLC for informational purposes only and does not create an attorney–client relationship. You should not rely on the information contained herein without first consulting qualified legal counsel regarding your specific situation. Laws change over time, and the application of law varies based on individual facts. For advice tailored to your circumstances, please seek guidance from a licensed attorney.

Who Benefits from a Non-Disturbance Clause in Arizona?
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Who Benefits from a Non-Disturbance Clause in Arizona?
Who Benefits from a Non-Disturbance Clause in Arizona? 773 747 Gottlieb Law

Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

Protecting property rights, especially in commercial real estate, is more complex than it may first appear, particularly in Arizona’s competitive market. For anyone involved in real estate—whether you’re a tenant, landlord, or lender—a non-disturbance clause can be a crucial element in ensuring stability and security and is typically part of a Subordination, Non-Disturbance, and Attornment agreement (SNDA). This article mainly explores the non-disturbance clause.  This clause isn’t just another formality in a loan agreement; it’s a safeguard that protects tenants’ leases and provides all parties with peace of mind when ownership or financial circumstances change unexpectedly.

This article explores everything you need to know about non-disturbance clauses, including how they function, who gains from them, and the essential protections they provide for all parties involved. You’ll also gain insights into why enlisting skilled legal guidance is essential to structuring these agreements effectively in Arizona’s unique real estate environment. Read on to understand how a well-negotiated non-disturbance clause can make all the difference for your real estate interests.

What is a Non-Disturbance Clause?

A non-disturbance clause is a specific agreement that a tenant signs that benefits tenants by ensuring they won’t lose their lease interest if their landlord defaults on the loan and the lender repossesses the property. Although exceptions exist, this clause helps protect tenants to ensure they can keep running their business or stay in the property without disruption. Essentially, it’s an agreement that helps to maintain business continuity and property stability in times of financial turbulence.

In Arizona, where real estate is a vibrant and competitive market, a non-disturbance clause has a unique and impactful role. Understanding the purpose and potential of this clause is key for property owners, tenants, and lenders alike—and it’s also an area where legal guidance can be incredibly beneficial.

Key Stakeholders of a Non-Disturbance Clause

A non-disturbance clause offers valuable protections to multiple parties, each with distinct interests and benefits. The primary stakeholders include tenants, landlords or property owners, and lenders:

  • Tenants secure peace of mind, knowing that their lease terms will be upheld.
  • Landlords attract high-quality, long-term tenants by providing the reassurance of uninterrupted lease stability, which enhances the property’s appeal.
  • Lenders benefit from a reduced risk, as a stable tenant presence can simplify property management and preserve property value if foreclosure occurs.

While each party’s needs differ, their interests converge in creating a stable leasing environment that minimizes disruptions and promotes long-term investment.

Successfully negotiating a non-disturbance clause requires a carefully structured approach. A vetted process, paired with a thorough commercial lease negotiation checklist, ensures that all terms are clearly defined and aligned with each party’s goals. For a comprehensive guide on navigating lease agreements, see Gottlieb Law’s Commercial Lease Negotiation Checklist.

Value of a Non-Disturbance Clause for Tenants in Arizona

A non-disturbance clause provides tenants with a security net, one that’s especially critical for businesses that rely on a stable location to serve customers and grow their operations. Here’s what this clause brings to Arizona tenants:

Lease Security and Stability

Imagine a business that has invested in a physical space with custom improvements, branding, and local recognition. Without a non-disturbance clause, this business could be at risk if the property changes hands due to the landlord’s loan default. Although exceptions exist, a non-disturbance clause provides peace of mind that, even if ownership changes, the tenant can remain in place, securing their investment and future growth.

Maintained Lease Terms

A non-disturbance clause ensures that all initial lease terms are likely to remain intact. Tenants will likely not have to worry about renegotiating terms or adjusting to sudden changes. This assurance is particularly valuable in competitive Arizona markets, where business space is at a premium, and securing a favorable lease can be challenging.

Reduced Business Disruption

A sudden lease termination can disrupt business operations, impacting revenue and customer relationships. A non-disturbance clause provides business continuity, allowing companies to avoid disruption and serve their customers as usual. In cases where a tenant has invested heavily in the space, this stability is invaluable.

Arizona-Specific Insights

Arizona has distinct real estate guidelines and the lease is the critical document that defines the parties’ rights and obligations, making the non-disturbance clause especially relevant. Working with a law firm well-versed in Arizona real estate law can help tenants better understand and maximize the benefits of this clause.

Benefits of a Non-Disturbance Clause for Landlords

For landlords and property owners, a non-disturbance clause is not just a concession; it’s a tool that can significantly enhance a property’s appeal and value.

Attracting Quality Tenants

High-quality, long-term tenants seek stability, and a non-disturbance clause gives them the reassurance they need. This clause can make a property far more attractive in a competitive market like Arizona, where business owners want to invest in locations without fear of eviction or disruption.

Enhanced Property Appeal and Value

Properties with stable tenants and favorable leasing terms tend to command higher market values. A non-disturbance clause can add to a property’s appeal, as it supports continuity and long-term leasing security, making it more attractive to prospective buyers or new investors.

Lender Confidence

Lenders view properties with non-disturbance clauses more favorably. Knowing that tenants won’t vacate if they have to repossess the property means fewer vacancy risks, which may result in improved loan terms or even lower interest rates for landlords.

Lender Advantages of a Non-Disturbance Clause

While lenders seem one step removed from tenants, they have a vested interest in the non-disturbance clause’s impact. Here’s how it works in their favor:

Risk Reduction

Lenders often view properties with established tenants as lower-risk investments. The non-disturbance clause minimizes the risk that the property will be left vacant if they assume ownership, allowing lenders to maintain a steady income stream from existing leases.

Loan Security

Knowing that reliable tenants will remain in place despite changes in ownership strengthens a lender’s position. Tenants who are assured they can stay will also be more likely to fulfill their leasing obligations, giving lenders a consistent cash flow even in foreclosure scenarios.

Tenant Cooperation

With a non-disturbance clause in place, tenants are more likely to cooperate with new owners, reducing the likelihood of disputes or legal complications. This can make transitioning ownership smoother, which is always an advantage in managing foreclosed properties.

Case Scenarios: When a Non-Disturbance Clause Matters Most in Arizona

Understanding when a non-disturbance clause becomes critical can add clarity to why securing this agreement is a wise decision. Here are a few typical examples:

Commercial Retail Properties

Arizona’s commercial retail spaces—ranging from individual storefronts to bustling shopping centers—can gain significant protection from non-disturbance clauses. For instance, a retailer in a popular shopping center may need the assurance that their lease will remain intact, even if property ownership changes hands because of a loan default. This stability helps businesses invest confidently in their locations without fear of unexpected disruptions.

Partnering with an experienced commercial real estate law firm is essential in securing these protections. Skilled legal guidance can ensure that non-disturbance clauses are carefully negotiated and tailored to meet a tenant’s unique needs. For more on choosing a real estate law firm that meets your needs in Arizona, check out Gottlieb Law’s Guide to Finding the Right Commercial Real Estate Law Firm.

Office Complexes

In multi-tenant office complexes, a non-disturbance clause can provide tenants with stability in otherwise uncertain circumstances. Office tenants who rely on their specific location and setup to serve clients need this clause to continue operating smoothly.

Mixed-Use Properties

For tenants in mixed-use buildings, particularly in Arizona’s growing urban areas, a non-disturbance clause can secure both commercial and residential leases. The clause’s stability benefits ensure that all tenants in a mixed-use property can likely continue coexisting without facing sudden eviction risks.

Steps to Securing a Non-Disturbance Clause in a Loan Agreement

Obtaining a non-disturbance clause isn’t automatic; it requires careful negotiation and documentation. Here’s a general approach:

Initial Contract Review

Securing a non-disturbance clause starts with a thorough contract review to ensure the clause is included. Legal expertise can provide tenants, property owners, and financiers with a thorough grasp of the clause’s conditions and potential impacts.

Negotiating Terms

Each party has specific needs, and a well-negotiated non-disturbance clause will reflect those needs. Experienced legal counsel can help tenants, landlords, and lenders advocate for terms that best align with their objectives and ensure a fair balance.

Documentation and Agreement

Finalizing a non-disturbance clause means carefully documenting the agreed-upon terms. By working with a real estate law firm, parties can avoid common pitfalls and ensure the clause is legally enforceable and tailored to the parties’ needs.

Working with Gottlieb Law on Real Estate Agreements

For tenants, landlords, and lenders in Arizona, Gottlieb Law has invaluable experience in navigating the complexities of lease agreements and loan clauses. Their team offers deep knowledge and hands-on guidance to help negotiate terms that safeguard tenant stability, attract quality tenants for landlords, and reduce risks for lenders. With their understanding of Arizona’s specific real estate environment, Gottlieb Law ensures each clause aligns with the unique needs and goals of each party involved.

Securing favorable amendments and well-structured lease terms isn’t just about legal compliance; it’s a critical component in the long-term success of many businesses. Thoughtfully crafted agreements can protect tenants during property ownership changes and enable smoother transitions, which benefits everyone involved. To learn more about effective lease structuring and amendments, read our detailed article on Tips for Structuring Building Upgrade Requests and Other Key Amendments in Commercial Lease Agreements.

Key Considerations for Arizona Tenants, Landlords, and Lenders

With Arizona’s unique real estate market conditions, it’s essential to weigh these factors:

  • Local Market Conditions: High demand and competitive property markets can make securing non-disturbance clauses more pressing for long-term planning.
  • Legal Nuances: Arizona-specific laws or lease provisions may influence the terms of a non-disturbance clause, which is why localized legal advice is invaluable.
  • Potential Pitfalls: Without proper legal support, tenants, landlords, and lenders may face misunderstandings or disputes that could have been avoided.

How Gottlieb Law Assists with Arizona Real Estate Contract Negotiations

When it comes to understanding who benefits from a non-disturbance clause in Arizona, it’s clear that tenants, landlords, and lenders all have something to gain. However, navigating these complex agreements and ensuring they’re correctly implemented requires expertise. Gottlieb Law offers Arizona’s property owners, tenants, and lenders the legal insight needed to negotiate and secure favorable non-disturbance clauses that protect everyone’s interests.

Whether you’re a tenant seeking lease security, a landlord looking to increase your property’s appeal, or a lender seeking risk reduction, Gottlieb Law has you covered. Call us today at 602-899-8188 or use our Contact Us page to schedule an initial consultation to learn how we can help protect your rights and interests through a well-structured non-disturbance clause.

Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

Gottlieb Law - Tips for Structuring Building Upgrades and Key Amendments in Existing Commercial Lease Agreements
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Tips for Structuring Building Upgrade Requests & Other Key Amendments for Existing Commercial Lease Agreements in Arizona
Tips for Structuring Building Upgrade Requests & Other Key Amendments for Existing Commercial Lease Agreements in Arizona 2043 1362 Gottlieb Law
Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

Landlords and tenants alike understand the importance of a lease agreement in Arizona, which governs the use of a property during a set period of time and establishes a working relationship between parties. This is common knowledge, but what is lesser known is that any party named in a commercial lease is able to request amendments to the agreement.

For commercial properties especially, building upgrades and property expansions can significantly impact the terms of a lease. Any planned changes to the premises itself requires revisiting existing agreements, so landlords and tenants should be familiar with the amendment process. It is also wise to work with an experienced real estate attorney who can help with navigating Arizona commercial lease amendments and protecting your interests.

Commercial Lease Amendments vs Addendums

There are two types of changes most commonly made to commercial lease agreements in Arizona: amendments and addendums. An amendment is a modification or change made to an existing lease agreement. It typically alters specific terms or provisions of the lease, such as rent amount, lease duration or permitted use of the premises. An amendment requires the consent of all parties involved and is usually signed as a separate document to be attached to the original lease.

On the other hand, an Arizona commercial lease addendum is an additional document that supplements the original lease agreement. It introduces new provisions or terms that are not included in the original lease. An addendum can address various aspects, such as additional tenants or legislation that requires additional legal disclosures. Like an amendment, an addendum is also typically signed by all parties involved and becomes part of the lease agreement.

While both a lease amendment and addendum involve modifications to a commercial lease agreement, an amendment changes existing terms, while an addendum introduces new provisions or terms.

When to Amend a Commercial Lease

Over the course of a commercial lease term, one or more parties who signed the agreement may find themselves in different circumstances that make certain provisions within the lease unfavorable. Rather than drafting an entirely new lease agreement, the parties can simply create an amendment to the original document.

The following are common examples of when to amend a commercial lease:

  •       To change the amount of rent
  •       To address any changes on the premises, such as expansions or building upgrades
  •       To extend the length of the lease
  •       To adjust terms, such as use provisions

As long as all parties agree to the proposed amendments of the lease agreement, any details can be changed.

Tips for Structuring a Lease Amendment Request

When structuring building upgrade requests or other key amendments for existing commercial lease agreements, it’s important to be clear, concise and professional in your communication. Here are some tips to help you structure such requests effectively:

  1. Start with a polite and professional salutation, addressing the appropriate party or parties involved in the lease agreement.
  2. Clearly state the purpose of the request. For example, if you are requesting building upgrades, specify the nature of the upgrades and their significance.
  3. Provide a detailed explanation that explains why the requested amendment or upgrade is necessary. Outline the benefits it will bring, such as improved functionality, energy efficiency, safety or compliance with regulations. Include any relevant data or documentation to support your request.
  4. Specify the desired terms. This may include the scope of the upgrades, estimated costs, timeframe, responsibility for expenses and any other relevant details. Be as specific as possible to avoid ambiguity.
  5. Justify the financial implications. If the requested amendments or upgrades will involve additional costs, provide a reason for these expenses. Explain how the upgrades will enhance the value of the property, attract more tenants or improve overall profitability.
  6. Propose a meeting or discussion to further explain your request and address any questions or concerns. This shows your willingness to collaborate and find mutually beneficial solutions.
  7. Express willingness to negotiate the terms of the requested amendments. This demonstrates a cooperative approach and can help foster a positive working relationship.
  8. Conclude your request by showing appreciation for the recipient’s attention to your request.
  9. Offer your contact information so that the recipient can reach back up with you to follow up on your request.
  10. Follow up with an email or phone call if you don’t receive a response within a reasonable timeframe to ensure your request has been received and to discuss next steps.

It’s important to keep in mind that all Arizona commercial lease agreements vary — and each has its own set of clauses. This is why you should consult with qualified legal counsel, which can help you navigate the complex process of making significant amendments to commercial lease agreements in Arizona.

Review Your Commercial Lease Amendments with an Experience Real Estate Attorney

Negotiating any proposed adjustments to a commercial lease in Arizona can be a complex and time-consuming process. Remember to assemble a strong team of professionals who can understand your needs, negotiate key terms and protect your interests.

The attorneys at Gottlieb Law are prepared to assist your company with negotiating a favorable commercial lease agreement. Contact us today at 602-899-8188 to schedule an initial consultation or make an appointment on our contact us page.

Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation.  Laws change over time and you should seek counsel to discuss any specific legal questions.

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