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NEGOTIATING KEY LEASE PROVISIONS A Landlord's Point of View - page 9 / 60

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repair obligations with a clause such as: "Subject to reimbursement by tenant pursuant to Section ___ above, to the extent applicable. . . . "

  • XI.

    SIGNS AND IMPROVEMENTS

    • A.

      Signs: The landlord should control and have the right to consent to the size, design and location of signs and other displays, banners, awnings and improvements which can be seen from outside the leased premises. Landlord may, for certain types of projects, want to develop sign criteria to ensure conformance of sign design within its project.

  • B.

    Tenant Improvements:

    • 1.

      Control: It is important that the landlord maintain control over alterations

and improvements made by tenants to prevent poor workmanship, interference with structural integrity and to control the condition of the premises upon expiration of the term. The lease should state that all improvements and alterations become the property of landlord at the end of the term. However, landlord may want to condition its consent to improvements on the tenant's agreement to remove the same and restore the premises to their original condition upon surrender at the end of the term.

    • 2.

      Contractor Liens: Landlord should have the right to approve the contractor who will be performing the work on behalf of the tenant. The lease should prohibit the filing of any liens on the premises or property. Landlord may want to require a bond to be posted to secure performance and/or payment with respect to the improvements.

  • XII.

    INSURANCE AND INDEMNITY

A.

General: Landlord should seek the advice of its insurance agent both in drafting

language for its standard form lease and in negotiating these provisions with tenants. It is

essential that the landlord's insurance coverage and the coverage required of the tenant constitute a proper "fit."

B.

Tenant's Insurance: Tenant should be required to obtain and maintain, throughout

the entire lease term, comprehensive liability insurance covering the use of the premises and common areas by tenant's and its agents, employees, contractors and invitees. The amount of coverage will vary depending on the size of the tenant and the type of business it operates. The normal tenant liability coverage ranges from $1,000,000 to $10,000,000. In addition to liability insurance, tenants should carry "all-risk" casualty insurance, with business interruption coverage covering tenant's personal property and fixtures located within the premises. Longer term leases may provide for a method to increase coverage to

reflect inflation and new insurance coverage requirements general to the market.

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