Commercial Lease Breach: What Landlords and Tenants Can Actually Do

A commercial lease breach can put a business relationship under immediate pressure. A tenant may stop paying rent, violate a use restriction, make unauthorized alterations, assign the lease without permission, or abandon the premises. A landlord may fail to make a contractual repair, interfere with the tenant’s permitted use, or violate an exclusive-use provision. When the problem escalates, both sides need to know what the lease actually permits them to do.

If you are dealing with a commercial lease dispute, the Real Estate Contract Disputes practice area provides additional information about Nevada contract disputes and enforcement. Commercial leases are primarily contractual arrangements, so the first step is usually to read the lease carefully rather than assume that a particular remedy automatically applies. Nevada law also provides specific procedures for recovering possession of commercial premises in certain situations, particularly when rent is unpaid.

What Counts as a Commercial Lease Breach?

A breach occurs when one party fails to perform an obligation required by the lease. The most obvious example is nonpayment of rent, but commercial lease disputes can involve much more than rent.

A tenant could breach by using the premises for an unauthorized purpose, assigning or subleasing contrary to the lease, making prohibited alterations, failing to maintain required insurance, violating operating requirements, or abandoning the premises. A landlord could breach by failing to provide services expressly promised under the lease, interfering with the tenant’s contractual rights, or failing to perform obligations that materially affect the tenant’s use of the property.

The specific lease language is critical. Commercial leases are often heavily negotiated, and provisions concerning default, notice, cure periods, termination, attorney’s fees, insurance, maintenance, indemnification, assignment, and dispute resolution can significantly change the parties’ rights.

Start With the Default Provision

Before taking action, identify the lease provision that allegedly was breached and then find the section dealing with default.

Many commercial leases distinguish between different types of defaults. A monetary default may have a short cure period, while a nonmonetary default may require written notice and a longer opportunity to cure. Some provisions may also address repeated defaults differently from an isolated violation.

This matters because a party may have a valid complaint but still take the wrong procedural step. For example, sending a termination notice before the contractual cure period expires can create another dispute about whether the termination itself was effective.

Nevada law separately establishes certain notice requirements for unlawful detainer proceedings, so contractual remedies and statutory possession procedures should be considered together.

What Can a Landlord Do When a Tenant Breaches?

The landlord’s options depend on the nature of the breach and the lease. Depending on the circumstances, the landlord may be able to demand payment or performance, pursue damages, terminate the lease, recover possession, or seek other contractual remedies.

For unpaid rent at commercial premises with periodic rent reserved by the month or a shorter period, NRS 40.2512 provides a specific unlawful-detainer procedure after written notice requiring payment of the rent or surrender of the premises remains uncomplied with for five days.

Nevada also has a separate summary eviction procedure for certain commercial premises under NRS 40.2542. That statute allows a landlord, unless otherwise agreed in writing, to serve a notice requiring payment of rent or surrender and, after noncompliance, apply for an eviction order. The statute contains specific requirements concerning notice, court filings, and the tenant’s opportunity to contest the proceeding.

A landlord should therefore distinguish between terminating the lease, recovering unpaid amounts, and recovering possession. These are related but not necessarily identical remedies.

What If the Tenant Violates a Non-Rent Provision?

Nonpayment is not the only basis for a commercial lease dispute. Nevada’s unlawful-detainer statutes address certain violations such as assigning or subletting contrary to the lease, waste, an unlawful business, and certain nuisances. NRS 40.2514 provides a three-day notice-to-surrender procedure for the specified violations listed in that statute.

For other failures to perform a lease condition or covenant, NRS 40.2516 provides a different framework. The statute addresses situations where a tenant fails to perform a condition or covenant of the lease and remains in possession after receiving written notice requiring performance or surrender. It generally provides five days after service for the tenant to comply and states that performance within that period can save the lease from forfeiture when the covenant can still be performed.

The distinction is important because landlords should not assume that every breach permits the same notice period or immediate termination.

What Can a Tenant Do When the Landlord Breaches?

Tenants are not limited to defending against eviction. Depending on the lease and the seriousness of the landlord’s conduct, a tenant may have claims for damages or other relief.

Nevada Supreme Court decisions recognize that a landlord’s material breach can, in appropriate circumstances, result in constructive eviction. In Medical Multiphasic Testing v. Linnecke, the Nevada Supreme Court addressed a business lease and recognized that sufficiently serious wrongful conduct by a landlord may support equitable relief, including a declaration of constructive eviction and damages.

Similarly, in Las Vegas Oriental, Inc. v. Sabella’s of Nevada, Inc., the court found that inadequate heating and air conditioning in important portions of a commercial premises could constitute constructive eviction where the loss substantially impaired the tenant’s use of the premises.

However, constructive eviction is not simply a label a tenant can apply whenever the landlord violates the lease. The seriousness of the landlord’s conduct, its effect on the tenant’s beneficial use, and the tenant’s response all matter.

Can a Tenant Stop Paying Rent?

This is one of the most dangerous assumptions in a commercial lease dispute.

A tenant may believe that the landlord breached first and therefore rent no longer has to be paid. That conclusion is not necessarily correct. Whether a tenant can withhold rent, offset damages, terminate the lease, or pursue another remedy depends on the lease, applicable law, and the nature of the landlord’s breach.

Commercial tenants should be particularly cautious before unilaterally stopping rent because a payment default can create a separate basis for the landlord to pursue remedies. Nevada law provides specific procedures for commercial nonpayment, including the five-day notice period described in NRS 40.2512.

If the landlord’s breach is serious enough to justify a legal remedy, that issue should be established before the tenant creates a second default by withholding rent without a contractual or legal basis.

What About Damages?

Both landlords and tenants may pursue damages when the other party breaches a commercial lease, but the amount must be supported by evidence and appropriate legal principles.

Nevada courts have emphasized that damages cannot simply be based on speculation. In Las Vegas Oriental, the Nevada Supreme Court upheld a finding of lease breach but reduced the damages because portions of the award were not legally recoverable.

The court has also addressed lost profits in commercial lease disputes. In Polk v. Armstrong, the Nevada Supreme Court recognized that a tenant whose business was wrongfully evicted could recover business losses, including lost profits, when those damages could be established with reasonable certainty.

For either side, therefore, financial records matter. Rent ledgers, invoices, repair costs, sales records, accounting statements, communications, and evidence of mitigation can become important when establishing damages.

What If the Breach Is a Lease Assignment or Sublease?

Assignment and subleasing can create serious commercial lease disputes, particularly when the lease requires landlord consent.

Nevada’s unlawful-detainer statute specifically identifies assignment or subletting contrary to the covenants of the lease as a circumstance that can constitute unlawful detainer.

A tenant should therefore review the assignment provision before transferring possession or bringing in another business. A landlord should likewise determine exactly what the lease prohibits before treating a transaction as a default.

The distinction between an assignment, sublease, change in control, management arrangement, and other restructuring can matter depending on the lease language.

What If the Lease Requires Mediation or Arbitration?

Many commercial leases contain detailed dispute-resolution provisions. A lease may require negotiation, mediation, arbitration, or another process before litigation.

These provisions should be reviewed before filing a lawsuit. A party that ignores a contractual dispute-resolution requirement can create an avoidable procedural issue, particularly if the provision establishes a prerequisite to litigation.

The same principle applies to notice provisions. A lease may require written notice to a specified address or person, provide a contractual cure period, or establish how notices must be delivered. Sending an informal email may not satisfy a carefully drafted contractual notice requirement.

What Should Both Sides Do Before Escalating the Dispute?

The most useful first step is to assemble the complete lease file. That includes the original lease, amendments, guaranties, exhibits, renewals, notices, payment records, correspondence, repair requests, inspection reports, and any side agreements.

Next, identify the specific obligation that was allegedly breached and determine whether the breach is monetary, nonmonetary, continuing, or potentially curable. Review the notice and cure provisions before taking action.

Finally, document the consequences. A landlord pursuing damages should establish the unpaid amounts and other losses. A tenant asserting a landlord breach should preserve evidence of the interference, repair failures, loss of use, or other harm.

The goal is not simply to prove that something went wrong. It is to establish what the contract required, what happened, whether the breach was material, what notice was required, and what remedy the law and lease actually permit.

About Milan Chatterjee

This article was prepared by Milan Chatterjee, a Nevada and California licensed attorney and founder of My Real Estate Lawyer, a real estate law practice dedicated to protecting property owners, investors, landlords, homeowners, businesses, and community associations throughout Nevada.

Milan Chatterjee focuses on real estate litigation and disputes involving property purchases and sales, property transfers, quiet title actions, title disputes, boundary disputes, easements, foreclosure, landlord-tenant matters, HOA disputes, and related real estate issues. He is a graduate of UCLA School of Law and NYU School of Law and previously served as Associate Compliance Counsel at Las Vegas Sands. He helps clients throughout Las Vegas, Reno, and other communities across Nevada.

Frequently Asked Questions

Conclusion

A commercial lease breach in Nevada does not automatically mean that the landlord can evict the tenant or that the tenant can immediately walk away. The available remedies depend on the lease, the type of breach, required notices and cure periods, and applicable Nevada law.

For landlords, the priority is usually to follow the lease and statutory procedures precisely before pursuing possession or damages. For tenants, the priority is to understand the alleged default and avoid creating additional exposure by taking unilateral action without a contractual or legal basis.

Nevada law provides specific procedures for commercial rent defaults and certain other lease violations, while Nevada case law recognizes that serious landlord breaches can also give commercial tenants meaningful remedies.