A commercial real estate lease is a legal document that covers rights, responsibilities and obligations of the parties involved. Regardless of which side of the contract you find yourself (landlord’s or tenant’s), signing a contract will create a legally binding agreement between you and the other parties involved.
The transactions that go smoothly don’t cause much notoriety; all the parties are happy in the end. The problem is when transactions go wrong. The main question then becomes, will yours be the side exposed to the most liability?
Here are a few points to consider before signing a commercial lease:
Which party created the lease? The party who created the document will almost always put their party in a more favorable situation. If you get to be the creator, your attorney will make sure your interests are protected first and foremost. One of our clients received a draft lease from a prominent landlord that put such negative provisions in its sections, that while the landlord could rely on a 15 year tenant, the tenant could really only rely on a lease that was month-to-month. While those may have been unenforceable, the tenant would have been disadvantaged from the start.
Are the provisions of the contract current? Have there been changes in the legal code, or even in the way things work in the world, that could have a negative impact? The legal landscape changes to reflect society, and so what was permissible before may not be permissible today – and that could bite you if your lease is outdated. A landlord we represented was unable to passthrough any of the expenses he thought he was able to, simply because the lease used was a form lease from the early 80s. We renegotiated on his behalf and updated the lease to be current, but this mistake from a previous attorney cost him tens of thousands of dollars over the term of the lease.
Was the contract prepared by a real estate agent instead of an attorney? Many legal problems are caused by poorly drafted agreements by well-meaning, but unqualified, real estate agents. A comma in the wrong place could change the meaning of the entire provision. When it comes to rights, liabilities and obligations, it is wise to have your contracts drafted by an attorney who is not only skilled but is legally able to do so.
Have you been exposed to the issues that can arise in a landlord/tenant? Are these issues thoroughly addressed in the contract? Is your side represented well? Real estate is a specialized area of law. Many landlords and tenants learn by experience, but, as they also learned, the tuition at the School of Hard Knocks is much to high. Using an attorney with experience in commercial real estate as a landlord, tenant, broker, transactional law AND litigation gives you a very complete map. It gives you the confidence of expertise of what can go wrong and what can, with a little tweaking, go extremely right.
How objective are you about this specific transaction? Are there important areas that are implied, rather than included in the contract? Have you considered what would make the transaction a deal breaker? Are those issues addressed in the contract? The more urgent the deal appears, the sloppier and less thorough your attention to detail becomes. Especially when the pressure is made greater by large numbers at stake.
There are many pieces to the leasing puzzle, and we help you navigate the contract, including the determination of which parts are critical for your success and which are less important. We strategize with you on the following areas and more:
We will also educate you on what the entire transaction should look like given the Agreement – from exchanging the keys to strategies for eventual renewal. Here is how an experienced commercial real estate attorney will help your side of the deal:
The attorneys at the Moschetti Law Group have been representing high net-worth individuals, private equity firms, and family offices for over 16 years. We built our firm on a set of principles which puts our clients first by providing outstanding representation, aggressive negotiation, and world-class client service and communication.
See how the Moschetti Law Group can help by setting up a free, no-obligation strategy session right now.