The Dreaded Lease Basics You Should Know
This chapter may as well be called "The Myths about Leases."
A lease is a contract like any other that your company enters into. Why is it then that a vast majority of tenants simply sign the landlord's "standard lease" with only some minor modifications, if any at all? If you were presented with any other contract by a vendor you would surely modify the language so your interests were protected. Oh, that's right...it's the landlord's STANDARD lease. ALL the tenants sign them!!!
I do have a bridge in Brooklyn for sale ( For those in LA, Brooklyn is where the Dodger's used to play).
Leases are often very long and complex. For the most part, everyone hates to read them. Maybe that's simply a strategy by the landlord's attorney to make sure they don't get read or, for that matter, modified. READ YOUR LEASE.
So you're not an attorney, so what? So you're not a real estate broker, so what? While there may be lots of legal garbage you don't understand, you certainly would be worth your time to give it the old once over. Included in this and other chapters, we will go over specific sections of the lease and how it may affect you and your company. A vast majority of the leases we review "after the fact," contain clauses that can have a tremendous negative effect on the tenant but don't appear in the Base Rate or Size of Premises section. Even those simple sections may contain inaccuracies you need to watch out for.
But first, some basics.
BIG QUESTION NUMBER ONE!!! What type of property are you in? Is it an industrial building? Office Complex? Retail Center? Multi-tenant park? Every type of property has certain idiosyncrasies and needs that must be addressed. In California, the American Industrial Real Estate Association (AIR) has developed a series of "standard" leases that are specifically geared towards each type of specific property. BUT REMEMBER, STANDARD DOES NOT MEAN RIGHT OR COMPLETELY FAIR FOR YOU.
But Why? Leases should address all the issues relevant to the particular building. Industrial buildings do not have the same common area costs as do office buildings. For that matter, multi-tenant industrial buildings have different costs which are borne by the tenant than office or industrial users. Retail...well that's a horse of a totally totally, TOTALLY DIFFERENT COLOR.
We have seen industrial leases used for office buildings that never mentioned any right of the tenant to park. When the landlord decided to sell to empty lot next door to a parking concessionaire, OOPS! How about the services the landlord is supposed to provide? A multi-tenant industrial park will never address the new tele-communication issues. If the landlord gives you one of those leases and your phones go down, who's responsible for problems within the building? (Check you office lease, chances are even your latest lease forgets to address that issue).
Oh, so you have discovered you have an office lease for your office building. Think you're out of the water yet? Think, again. Is your lease a FSG, NNN, MG, IG? What language is that?
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