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Market Insight Articles

Building Better Leases Series – Term: Delay in Possession

Building Better Leases Series – Term: Delay in Possession

Delay in Possession refers to the rights and duties of the Parties if the leased property is not delivered to the Tenant on the Commencement Date of the lease. This term protects the Landlord from being held responsible for a delay. There are various reasons for a...

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Building Better Leases Series – Term: Definition

The term refers to the period of time starting with the Commencement Date and ending with the Expiration date. It does not include any “Early Possession” period. Other terms included may be: Extension – moving the termination date of the current lease, typically for...

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Building Better Leases Series – Term: Lessee Compliance

Many tenants put obtaining insurance low on the list of priorities when moving into a new building. The Lessee Compliance ensures that tenants are in fact covered by insurance. The Lessor can withhold possession of the Premises until such evidence is shown, so it’s...

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Building Better Leases Series – No Right to Holdover

A holdover tenant refers to a renter who remains in a property after the expiration of the lease. If the Landlord continues to accept rent payments, the holdover tenant can continue to legally occupy the property, and state laws and court rulings determine the length...

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Building Better Leases Series – Attorneys’ Fees

In the event of a lawsuit, the losing Party is required to reimburse the Prevailing Party for all attorney fees that are reasonable incurred. Regardless if it’s necessary or not to file a lawsuit, the Lessor is entitled to legal fees incurred in conjunction with...

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Building Better Leases Series – Auctions and Signs

Auctions The Lessee should not conduct any auctions on the Premises unless they are given written permission from the Lessor. Auctions are not common, but may arise in the event that the Lessee becomes bankrupt or has catastrophic financial event and they would want...

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Building Better Leases Series – Options

Definition Option refers to the right to extend or reduce the Lease Term for the Premises or any other property owned by the Lessor and the right to refusal or first offer to lease or purchase the Premises or any other property owned by the Lessor. The Lessee needs to...

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Building Better Leases Series – Guarantor

Execution The Guarantor is required to execute a guaranty form. Even though the Guarantor is listed in section 1.11, it does not mean the Lease has been guaranteed. The guaranty is only in effect when a separate guaranty form has been executed by the Guarantor....

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Building Better Leases Series – Performance Under Protest

Under protest refers to a payment made subject to a dispute. The payor typically makes the payment with notice to the payee that the payment is being made under protest, thereby reserving the right to object to the obligations later. This section allows a Party to...

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Building Better Leases Series – Estoppel Certificates

An Estoppel Certificate is a signed document in which the terms of the Lease are verified and confirmed by the Parties. It is used in mortgage negotiations to establish facts and financial obligations, such as outstanding amounts due that can affect the settlement of...

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Building Better Leases Series – Condemnation

Condemnation refers to the acquisition of the property for any public or quasi-public purpose or for the intent of purchase by any governmental authority in lieu of the exercise of the right of eminent domain. The Lessee may terminate the Lease if more than 10% of the...

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Building Better Leases Series – Default, Breach, Remedies

Default and Breach A Default refers to the Lessee’s failure to comply with or perform any of the terms, covenants, conditions or Rules and Regulations under the Lease. A breach refers to the occurrence of one or more of the following Defaults and the failure of the...

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Building Better Leases Series – Assignment and Subletting

Before delving into this section, it’s important to understand the difference between an assignment versus subletting. An assignment of a Lease is a complete transfer of the right to be the tenant under the Lease. The third-party assignee becomes the “tenant” under...

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Building Better Leases Series – Utilities and Services

For reference, a single net lease charges the tenant either for property taxes or insurance as well as for utilities. A double net lease includes both property taxes and insurance as well as utilities. A triple net lease adds all operating costs except structural...

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Building Better Leases Series – Real Property Taxes

Definition Property Taxes refers to the ad-valorem tax, calculated by a local government, that is paid by the owner of the property. The tax is usually based on the value of the owned property, including land. The local governing body will use the assessed tax to fund...

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Building Better Leases Series – Damage & Destruction

“Premises Partial Damage” Partial Damage refers to destruction to improvements that can be repaired within 6 months from the date they were damaged. These damages do not cost more than 6 months of Base Rent. In addition, they do not include the cost of repairing...

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Building Better Leases Series – Rent: Security Deposit

The Security Deposit refers to the amount of money the landlord holds on behalf of the Tenant to protect himself from unpaid rent or damage to the Premises. All security deposits are refundable. The landlord should inform the tenant in advance about the conditions...

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Building Better Leases Series – Rent: Association Fees

Association Fees are used to maintain common areas of the Premises. The purpose of Association Fees is to require tenants to help cover the Landlord’s direct expenses for “common areas”. Common areas can include both internal (hallways, elevators, lobbies, public...

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Building Better Leases Series – Rent: Payment

Rent refers to all monetary obligations (except the Security Deposit) that a Tenant pays to a Landlord for the occupancy and use of the Premises. The Security Deposit is exempted in order to avoid it being deemed income and thus taxable to the Lessor. The purpose of...

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Building Better Leases Series – Term and Early Possession

The term refers to the period of time starting with the Commencement Date and ending with the Expiration date. It does not include any “Early Possession” period. Other terms included may be: Extension – moving the termination date of the current lease, typically for...

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Building Better Leases Series – Premises

The Premises refers to the location of the actual space that will be occupied by the Lessee (address, city, state, zip, country). At minimum, this means land, but it can also include other infrastructure (i.e. fencing), so in a typical situation the Premises in a...

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Building Better Leases Series – Premises: Condition

It is the Landlord’s statutory duty to maintain the rented Premises in a habitable condition at all time. Similarly, it is the Tenant’s statutory duty to refrain from damaging the Premises throughout their occupancy. To avoid dispute over who is responsible for any...

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Building Better Leases Series – Premises: Letting

Letting refers to renting out the Premises to the tenant. Commercial rents are quoted on a per foot basis. This allows lease rates to be compared on an “apples to apples” scale because every property is different. It’s important to keep in mind that the concept of...

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Building Better Leases Series – Guarantor

The Guarantor is responsible for guaranteeing the Lessee’s performance and accepts all of the liabilities included in the Lease. The Lessee is not the same as a Guarantor. A guarantor must be a third party, for example, the owner of a corporation. They must also sign...

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Building Better Leases Series – Agreed Use

Agreed Use refers to the purpose for which the tenant intends to use the space. In this section of the lease, the landlord is not justifying that the agree use is legal, but rather that they are okay with that specific purpose. A potential tenant has the...

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About Justin

Over his 15 year career, Justin has honed his corporate real estate skills in order to guide organizations through the real estate process with minimal disruption.

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