Add Special Protections to Memorandum of Lease

In a recent article (“Protect Yourself When Signing Memorandum of Lease,” CLLI, August 2003, p. 1), we told you what information to include in a memorandum of lease that a tenant will record in governmental real property records to notify third parties of the lease's existence. After reading that article, Fort Lauderdale attorney Robert E. Howard pointed out additional information that you might need to include in the memorandum of lease: Depending on your state's law, you might also need to include special protections that you and the tenant agreed to in the lease. Even though the lease contains the special protections, in some states you risk losing them if you don't include them in the memorandum of lease (unless you record the lease instead), Howard explains. So check with your attorney before drafting your memorandum of lease, he advises.

For example, in Florida, a building owner can protect its property from the mechanic's liens of a tenant's contractors by recording a memorandum of lease (or lease) that says the tenant has no authority to grant any third party the right to place a mechanic's lien on the owner's property. If you record a memorandum of lease, not the lease, and don't include this protection in it, the owner's property could be subject to mechanic's liens resulting from the tenant's work, even though the lease includes the protection, Howard warns.

CLLI Source

Robert E. Howard, Esq.: Vice President and General Counsel, Gumberg Asset Management Corp., 3200 N. Federal Hwy., Fort Lauderdale, FL 33306; (954) 537-2700.