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Depending on whether a commercial lease is for a free-standing office, or retail  an industrial building or for office or retail space, and depending in the nature of the tenant’s business, there are particular issues which have to be addressed with great care in commercial leases.

Here are some of those issues:

  • zoning-need to check the zoning code as to whether the proposed use is a permitted or conditional use or  
    whether  a use variance will be required
  • parking in office space leasing-the  need to understand the prospective tenant’s parking needs and to determine if the parking is are sufficient for the Tenant and whether there are some assigned spaces
  • use clause-is the use clause to restrictive
  • retail space leasing-does the Tenant need any protection against the Landlord leasing other space for uses which may be competitive with the Tenant’s use?
  • retail space leasing- make sure that the Landlord’s other leases do not contain restrictions which would be applicable to Tenant’s use.
  • as to Landlord’s Work-need for carefully expressed details on what the Landlord is to do to the space or the building
  • delivery of possession date: for leased premises which is not vacant or which Landlord has to fit up, what should be the outside date for delivery of possession and substantial completion of any Landlord’s Work, after which the Tenant should have the right to cancel the lease
  • rent commencement date: delivery of leased premises with the Landlord’s Work “substantially complete”-definition of substantial completion.
  • rent commencement date: shopping centers and malls: should there be a contingency as to Landlord’s leasing a minimum of other retail space and other retailers or an anchor tenant being open for business
  • “Fair Rental Value” for step-ups of Base Rent during Initial Term or for Renewal Terms-need for detailed provisions for determination of Fair Rental Value and breaking any impasse
  • Rent increases based upon increases in the Consumer Price Index-need to avoid common mistakes and for precise language with  use of examples
  • Tenant’s proportionate share of Common Area Maintenance expenses (“CAM”) and Real Estate Taxes and Insurance of separated from CAM
    • what is to be included in CAM (e.g. for capital improvements and capital replacement only each year’s depreciable amount)
    • proportionate share based on ratio of sq. ft of the leased premises to leasable (not leased) sq. ft of the entire building
    • adjustment of Tenant’s responsibility for CAM and Taxes based upon an office building’s actual occupancy
  • Relationship of the amount of security deposit to the requirement of a full or limited personal guaranty
  • Limitation of Personal Guarantees: can the Tenant negotiate for what is sometimes known as a “good guy” guaranty or for some other limitation of liability
  • Tax appeals: where the Tenant pays for all or a portion of the real estate taxes, does the lease provide for the Tenant to get the benefit of a reduction of taxes through an appeal or otherwise
  • If the Lease provisions granting a lien for unpaid Base and Additional Rent on Tenant’s equipment, fixtures and/inventory, the Tenant may need a  provision subordinating such lien to the lien of a secured lender providing financing to Tenant
  • Assignment of the Lease
    • Tenant will want the Landlord in any event not to unreasonably withhold, delay or condition its consent
    • If the assignment of lease is incident to a sale of Tenant’s business Tenant will want the Landlord to have to agree to the assignment if the assignee has a net worth at least that of the Tenant when the lease was signed
    • Landlord’s criteria: financial ability and reputation of prospective Assignee
  • Non-Disturbance Agreements: where the lease provides for its subordination to the liens of existing mortgage holder(s) or future Mortgage holders
    • will the Landlord agree to obtain a Non-Disturbance Agreement from the present mortgagee and any future mortgagee
    • is the Tenant’s business such that it would suffer substantial damages if it were dispossessed by a mortgagee of Landlord Attorney Agreement or Discussion of a Form
  • Office Building Space: does the Tenant desire or need a s right of first refusal on contiguous space  that becomes vacant
  • Office and retail shopping center leases: a prospective Tenant has to carefully examine the property’s standard rules and regulations
  • Landlord’s duty of repair and maintain the building and common areas
    • Each Tenant should read these provisions very carefully
  • Landlord’s right to move the retail tenant or office space tenant to other space
  • Tenant’s Insurance: Prospective Tenant must consult with its insurance advisor the insurance  provisions of the proposed lease
  • Environmental Matters provisions