Implied Covenant of Good Faith and Fair Dealing

• Every contract under Washington laws has an implied duty of good faith.

• A good faith duty requires that both parties cooperate to their best capability. This cooperation ensures that they can obtain the full benefit of the lease’s performance.

• Many leases in Washington require at least one clause that states what could happen to a party that breaches this duty of good faith.

• This implied covenant doesn’t obligate a party to accept a material change in the agreement but to at least consider it if it’s a reasonable change or request.

Statutory Notice Periods

• Commercial agreements can have longer statutory notice periods than residential ones. The more extended notice period is due to the length of the agreement.

• In most cases, leases will have a 60 to 90-day notice period instead of a 30-day one.

• If the commercial agreement operates month-to-month, then the 20-day notice period also applies.

Security Deposits

• Lessors have no maximum limit to how much they can ask for the security deposit. However, the duty of good faith can keep it from being an unreasonable or unfair amount.

• Landlords aren’t obligated to pay the tenant interest on the security deposit. It also includes having no responsibility to keep the deposit in an interest-bearing account.

• A landlord can hold the security deposit in an account with other funds.

• Many lessors use the residential return period for the deposit, which is 30 days.

Disclosures

Washington has various legal disclosures. While many of these disclosures are meant for when you purchase a commercial property, they’re also valid when you lease one. These disclosures include:

• Property Title and Description: Legal description of property.

• Property Structure: Information on leakages, floodings, remodeling, and other structure issues.

• Water Rights and Sewage:Information about water certificates, claims, and sewage systems.

• Systems and Fixtures: Description of defects in electrical, plumbing, security, and other systems.

• Environmental Issues:Any damage from flooding, fires, shorelines, or other environmental causes.

Termination and Renewal

• A lease termination request from the tenant before the fixed agreement ends can activate an acceleration clause.

• An acceleration clause states that the tenant must pay all of the rent they would have originally paid. This rent refers to the amount due for the duration of the lease and is payable when they break the agreement.

• For most leases, tenants and landlords must give 60 to 90 days’ notice to terminate the agreement. The same notice period can apply for renewals, but it ultimately depends on the lessor.

• Most commercial leases will allow for two (2) to five (5) renewal periods. However, it depends on the landlords’ discretion and, sometimes, local government laws.