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Many office building and shopping center owners focus on the terms of the lease itself, forgetting that pre-lease agreements leading up to the start of the tenant’s term can make or break the deal from the start. But what about a scenario where the lease term never actually starts? If a lease deal doesn’t come to fruition, you may be left on the hook for costs of items that were necessary to push the deal forward. And that could be very, very high. The expen...
Commercial tenants typically want the right to “go dark”—that is, stop operating while continuing to pay rent—if their businesses aren’t generating enough revenue. “Going dark” can save tenants the cost of stocking and staffing the space they rent. But if you give a tenant the right to go dark, you may want to carve out a recapture right for yourself—allowing you to take back the space and replace the tenant.
When you lease space to a tenant, it’s impossible to predict whether you’ll experience the unpleasant repercussions of accidents, injuries, or criminal acts that can be attributed to the tenant. These events can be costly, but as with most other risks involved in leasing space, you can plan for the worst and hope for the best. An airtight indemnification clause can ensure that you won’t be left paying the price for the events caused by your tenant.
If you’re working with a prospective lender, buyer, or investor for your office building or shopping center, the last thing you want is a surprise tenant issue that can hold up or even kill the deal. Any party preparing to spend money will want to know that it won’t be blindsided later with tenant claims that it’ll be responsible for resolving. For example, a tenant could assert that you’ve defaulted on the lease for any number of reasons, such a...
A new trend is occurring whereby landlords are being held liable for the illegal activities of their tenants—regardless of the landlord’s involvement in those illicit activities. This trend is extremely disconcerting and requires landlords to take unprecedented measures and exert significant efforts to protect themselves from liability exposure to court-awarded damages for their tenant’s illegal activities.
Attorney’s fees are a point of contention in many owner-tenant disputes. Typically, one party argues that the other party should pay for its own legal fees and the legal fees the first party has incurred as a result of the lawsuit or other legal proceeding.
If an environmentally “risky” tenant, such as a dry cleaning business, gas station, or auto service center—which all use chemicals that could contaminate your property—will be lucrative enough to make taking the risk of potential damage worth it, it’s crucial that you protect yourself from liability and shift responsibility for any mistakes to the tenant. You don’t have to let a great lease deal go out of fear that you’ll be lef...
Technological advances that provide security and convenience for users are being made in leaps and bounds, and even the traditional commercial real estate industry is benefitting—most recently, from digital signature software. Traditional methods of executing leases and related documents—that is, ink-on-paper signatures—leave the door open for potential misunderstandings and even fraud. Digital signatures are a game changer—protecting both office...
One thing you do not like to hear when negotiating a commercial lease agreement is that the tenant must have possession of the space by some important date, known as the “drop-dead date.” Why? Because the tenant usually wants the landlord to suffer a variety of draconian consequences if the drop-dead date isn’t met. Examples include free rent, significant monetary penalties, and sometimes, the ability for the ten...
One of the key economic questions any commercial lease must address is whether the tenant is responsible for paying real estate taxes on the property and, if so, how much. More often than not, the tenant does have tax liabilities, but because of the money involved, the issue is often hotly negotiated. And while every deal is different and generally reflects the bargaining power of the sides involved, there are eight protections tha...
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