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NEGOTIATING KEY LEASE PROVISIONS A Landlord's Point of View - page 2 / 60

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  • I.

    INTRODUCTION AND GENERAL COMMENTS

    • A.

      Commercial Leasing: This outline focuses on commercial as opposed to residential lease provisions. Commercial leasing includes leasing of office, retail, industrial and other types of commercial projects.

B.

Standard Forms: It is always advantageous for a landlord to present the first lease

draft on its standard form. Standard forms should be reasonable while at the same time adequately protecting the owner/landlord on all issues. Forms can be "tenant friendly" as

opposed to being unduly one-sided.

C.

Attach All Exhibits: All exhibits referenced in or part of the lease need to be

attached to the lease itself for completeness and enforceability. Attorneys should review all

exhibits prepared by clients, such as legal descriptions, site plans, floor plans and construction exhibits or work letters to ensure consistency with the lease itself.

D.

Pass-Through Expectations: The landlord's pricing of basic rental usually assumes a

"gross," "triple net" or "net" lease structure. Thus, it is essential that the landlord's expectations as to who (i.e., landlord or tenant) will be responsible for taxes, insurance, common area costs, utilities and other costs of operating, maintaining and managing the building and project are properly reflected. (See discussion on Operating Expenses below.)

    • E.

      Relationship Tending. As an attorney negotiating a lease on behalf of a landlord, remember that the lease negotiation is the first step of a potentially long- term and mutually beneficial relationship. Lease negotiations do not need to be adversarial. Even the hardest negotiations, when conducted with professionalism and respect, can help cement, rather than impede, the landlord/tenant relationship.

  • II.

    DATE/PARTIES

  • A.

    Date: The Lease Agreement needs to be properly dated for reference purposes.

  • B.

    Tenant Identity: The landlord needs to make sure the proper "tenant" executes the

lease. If the landlord has reviewed and is relying on financial statements of individuals or an entity, it needs to be sure that the "credit" source is the executing party or a guarantor of the tenant's obligations. This is particularly true when the landlord is incurring up-front expenses for tenant improvements, brokerage commissions, etc.

C.

Continuous Liability: The lease should contain a clause providing that the tenant

shall remain liable for its obligations under the lease, even if there is a permitted assignment

or sublease, unless expressly released from liability by the landlord.

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