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Reviewing Commercial Leases

There comes a time when nearly every landlord and every tenant either needs to present a lease or be presented with one.  In commercial arrangements, landlords typically present leases to tenants, but there are occasions in which tenants present leases to landlords.  Who should be the preparer of the document on behalf of the landlord (or tenant), and who should be reviewing the document on behalf of the tenant (or landlord)?

Most people understand that oral leases are generally not good practice in real estate and do not take issue with having a lease in written form.  Most people also understand that a written lease agreement is a document of critical importance in the landlord-tenant relationship, controlling in significant part the rights and responsibilities of the parties throughout the term of the lease.  What sometimes gets lost or overlooked is the value of having an attorney either prepare or review a written lease agreement.

Certainly there are other professionals who work in real estate, namely, real estate agents and real estate brokers.  These people and institutions play an important role in the marketing and “sale” of properties, whether the properties are literally sold or just leased for a certain quantity of time.  They can be good resources for discovering the value of a particular property or a particular lease and have access to databases that show market comparables (a/k/a “comps”).  They also can be good sources of information for trends in the local, semi-local, and national markets.  When compared with attorneys, however, real estate agents and real estate brokers are probably not as knowledgeable about real estate law, contract law, and legal risk.  These areas are at the core of a real estate lawyer’s competency and are of utmost importance for both the landlord and the tenant when it comes time to prepare or review (and then sign) the commercial lease agreement.

Some of the technical, legal areas this law firm has experience with as it relates to commercial lease preparation or commercial lease review are the following:

  1. The permitted use(s) of properties;
  2. Restrictive covenants, exclusivity, or non-compete clauses;
  3. Personal guarantees, and by whom made;
  4. Default by tenant;
  5. Tenant’s insurance;
  6. Estoppel certificates;
  7. Sale of property by the landlord to a third party during the term of the lease;
  8. Tenant’s indemnity;
  9. Attorney’s fees;
  10. Relocation rights;
  11. Tenant improvements; and
  12. Rights of first refusal.

Each of these areas is important and needs to be carefully understood and worded within the agreement.  All of them often show up (or perhaps should show up) within a single lease agreement, making the document anywhere from a few pages to 75 or more.  Yes, this law firm has worked on commercial lease documents from four pages in length to in excess of 75 pages, including exhibits.  Commercial leases can and do vary significantly.

Real estate agents, or real estate brokers, and real estate attorneys bring different, valuable skill sets to the table.  It probably wouldn’t be a bad idea to have both a real estate agent (or real estate broker) and an attorney help with the preparation of a commercial lease contract or the review a commercial lease contract, but it would be unwise to permit the agent or broker to take over the attorney’s role and engage in the practice of law.

This law firm has experience with reviewing commercial leases on behalf of tenants and on behalf of landlords in the states of Kansas and Missouri.  This law firm also has experience with writing new leases on behalf of landlords in the states of Kansas and Missouri.

If you are a landlord or a tenant and would like to make an appointment with Kincaid Business & Entrepreneurial Law, LLC ® regarding a real estate law matter in connection with a commercial lease agreement or commercial lease negotiation, please feel free to conveniently schedule with us here.