Breaking a Commercial Lease in Alabama & Agreement Requirements

Drafting a solid contract is essential, especially if a tenant starts looking for reasons for breaking a commercial lease in Alabama. Unlike residential tenants who enjoy state-mandated protections, commercial leases are treated strictly as binding business contracts governed primarily by Title 35, Chapter 9 of the Code of Alabama 1975 and general contract law.

The Statute of Frauds

Official Law Citation: The rules and regulations outlined on this page are strictly configured under the official Code of Alabama 1975Preview unavailable. Landlords must always ensure their lease agreements directly adhere to this state code.

Under Alabama's Statute of Frauds (Code of Alabama 1975, § 8-9-2), any commercial lease intended to last longer than one year is void unless the agreement is in writing and signed at the foot (subscribed) by the party to be charged.

While it's technically possible to have an oral agreement for a lease under one year, it's a terrible idea. Running a business involves complex liabilities like insurance, maintenance, and taxes. A verbal agreement simply won't cut it.

Drafting the Rental Agreement

To make sure your Alabama commercial rental agreement holds up in an eviction or lawsuit, it needs several key components. Make sure you include the full legal names of both businesses and a highly specific description of the property.

To be legally valid and executed under Ala. Code §§ 35-4-20 and 35-4-23, all written leases must be either attested by at least one witness who can write their name or acknowledged before an authorized officer, such as a Notary Public.

Furthermore, under Code of Alabama 1975, § 35-4-6, no leasehold estate can exceed 99 years. If you are signing a lease that lasts over 20 years (including all renewal options), Alabama requires it to be officially acknowledged and recorded with the local judge of probate within one year of execution; otherwise, the portion of the lease exceeding 20 years is void.

Dealing with Early Termination

Tenants often ask for an early out. You should explicitly lay out the rules for a commercial lease termination notice within your contract. Will the tenant owe a penalty fee to break the lease? Do they need to provide a 90-day notice?

Under Ala. Code § 35-9-6, if a tenant breaches any lease condition (default), the landlord may terminate the tenancy by providing the tenant with a 10-day notice to quit. This statutory minimum applies unless the lease agreement provides for a longer notice period. You must outline what constitutes a default and whether the tenant can sublet the space to another business. By putting the termination terms in writing, you eliminate the guesswork if the tenant decides they want to leave early.

Staying Updated on Alabama Property Laws

Keeping up with exactly how these rules evolve is vital to protecting your investment. Alabama regulations and local zoning, building, and fire codes can shift, meaning what is perfectly legal today might require a new lease addendum tomorrow. Commercial properties are explicitly excluded from the Alabama Residential Landlord and Tenant Act (ARLTA). Always ensure your rental operations align with the most recent local guidelines and statewide precedents to avoid easily preventable compliance fines and prolonged disputes with renters.

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