Reading the Lease: Premises and Term

 

How exactly are the “premises” defined? This clause typically refers back to the definition page or some exhibit in the back of the lease that contains a diagram of the building and/or your suite. This section is pretty straightforward and didn’t even make the list in the recent American Bar Association’s list of lease pitfalls, as published in The Practical Real Estate Lawyer. Make sure to double check that the suite number is correct. Essentially, this is a stupid little thing, but you want to make sure you get your mail.

 

This paragraph may also refer to a definition of the common areas in the building, and what rights the landlords and tenants have. Of particular concern to you are the rights of the landlord to modify the common areas. Be sure this does not impact your use, ingress, or egress. What happens if they close certain areas for an extended period of time, putting a major dent in your convenience factor? What if they start work on the risers in the building and your phones go out? Recheck the floor plan (sometimes attached to the work letter in the back of the lease) and make sure you’re getting what you negotiated. We once had a situation where a landlord put an opening between two contiguous industrials spaces to make one large one. The city didn’t like it too much, but we showed them the lease that showed the opening already there. “Oops—if it was already there, it must be allowed.”

 

How exactly is the term defined? While this is another one of those “what could go wrong?” clauses, it is very important. Lots could go wrong. Tenants often encounter problems if the lease doesn’t actually start on the commencement date listed on the summary sheet. The exact dates need to be nailed down.

 

If the lease starts on a day other than the first of the month, some landlords automatically make the termination date the last day of that month during the termination year. Example: Let’s say a lease starts 2/15/08. The termination of a five-year deal should be 2/14/13. Some landlords may assume, however, that the correct termination date is 2/28/13. Make sure to watch for that. You don’t want your new lease to overlap, as it could mean double payments.