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Important Lease Clauses

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When it comes time to draft a new commercial lease, the Landlord and Tenant often spend weeks going back and forth wrangling over lease language. The larger, more sophisticated tenants have in-house counsel and have more bargaining power then the smaller mom and pops. The latter often time sign leases without completely understanding what they are signing. It is always advisable to have an attorney advise either the Landlord or Tenant on certain clauses dealing with liability in particular. As a commercial property manager, we have to live with and enforce the leases and so it’s always important that we understand what the owner has agreed to.

As a commercial property manager, we often get asked by our clients our opinion on certain leases clauses particularly as it deal with repairs and maintenance and common area expense caps. However, when it comes to sections of the lease that deal with liability we defer to the client’s attorney.

When a landlord or its attorney prepares an initial draft of a lease on the landlord’s form, it is expected that the tenant will l simply sign the lease (but only if the tenant believes it has no leverage whatsoever), return the lease with handwritten comments, or, if the tenant’s comments are extensive and it has taken control of the drafting process, return a black-lined copy of the lease that it has revised. What then begins is the long exercise of lease negotiation, where each side asserts its best positions with the hope of ending up with a lease with which each side can live. There are, however, five provisions the landlord and its attorney should be very hesitant when modifying:

  • Hazardous Materials
  • Indemnification
  • Insurance
  • Waiver of Subrogration
  • Liability of Landlord

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