What’s at the end of the standard commercial lease agreement?

Those short sections are legally binding in the commercial lease agreement and should be read and understood!

The standard commercial lease agreement will contain important information at the beginning and the end of the lease document. The beginning of the lease (before all of the numbered sections), also known as the “whereas” clauses or “recitals”, are like an introduction. They should provide general information, like the purpose of the contract and who is signing it.

RECITALS

A good commercial real estate attorney will read all of those recitals, and confirm that the information they contain is correct. The signatory entity name might change, or the suite number might not be the right one. It’s not unheard of to have an entirely incorrect address, especially if Landlord owns multiple properties and uses the same lease form for each one.

These recitals matter, and they are easy to catch and change during lease negotiations. The fun begins at the end of the lease, where important items linger that are easy-to-skim-over stuff before the signatures and the exhibits. Even if these items are the last ones in the commercial real estate lease agreement, that doesn’t mean they aren’t important. All of that “other miscellaneous stuff” is just as legally binding as the first part of the lease, or it wouldn’t be there.

OTHER MISCELLANEOUS STUFF

These sections can address innocuous things like pronoun use, or provide state-specific disclaimers (such as radon gas in Florida or CASp inspections in California). Tenant could agree to abide by the Patriot Act or OFAC rules (good!) or become bound to not record a lease (bad news in Louisiana).

These sections could include a catch-all provision. For example, instead of stating a specific notice and cure period each time default is addressed in the lease document, the drafter might put all of the notice and cure provisions together at the end of the document and make it a stand-alone section, which is applicable throughout the lease. That’s not a problem- unless it contradicts a previous section in a lease! It’s important to treat the lease as a holistic document. If a section is disclaimed or limited by another section, it’s vital to check those referenced sections in other parts of the document.

WATCH FOR INCREASED OBLIGATIONS

“Other miscellaneous stuff” sections could also impose additional obligations or limit the rights of the parties to the agreement. For example, a clause at the end of the commercial real estate lease agreement could give away venue for disputes from a Tenant-friendly to a landlord-friendly state, or even surrender litigation options in favor of forced arbitration.

Another example is that Tenant could be required to provide financial statements, whenever Landlord requests them! Negotiation tip: limit how many times these have to be provided to Landlord, once per calendar year is usually sufficient. Bonus negotiation tip: be alert for what is missing in these sections. In the financial statements example, is there a requirement for Landlord to keep these statements confidential?

It’s absolutely vital to read the entire standard commercial lease agreement from beginning to end. If you don’t, you might be surrendering important legal rights that might be in another section of the commercial real estate lease document.

This article does not create an attorney-client relationship. This article is for general education purposes only and is not legal advice. You should consult with a qualified attorney before you rely on this information.

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