Traps to Avoid

Calculating Lease Costs Without a CPA

May 23, 2022    

Certified public accountants (CPAs) don’t work for free. And if you know math, you may not need one to calculate your own real estate tax, cost-of-living increases, operating expenses, and other lease costs you pass along to tenants. However, the money you save on CPA fees by doing your...

Waiving the Right to Evict by Accepting Late or Partial Rent

March 22, 2022    

Of course, you want to ensure that all tenants pay full rent on time every month. But you’re not just a landlord but also a businessperson who understands that half a loaf is often better than no loaf at all, especially when times are tough. Why not just cut a tenant who’s struggling...

'Prevailing Party' Attorneys' Fees Clauses Don't Work for Mixed Ruling Cases

November 23, 2021    

Litigation is expensive, but it’s often unavoidable. Consequently, most landlords seek to ensure they can recover their legal costs if they have to take the tenant to court to enforce the lease.

Excluding 'Wholesale' Sales from Percentage Rent Can Cost More Than You Bargained For

September 21, 2021    

Some types of percentage rent tenants, such as building supply and paint stores, are apt to insist on carving out “wholesale sales” since they make less profit on those sales. You may have little choice but to accept this demand, especially when the tenant is a retail giant like Home...

Boilerplate Booby Trap: Clauses Requiring Written Agreement for Lease Termination

April 21, 2021    

Here’s a suggestion for anyone who uses a standard boilerplate lease: Look through the document and see if it includes a statement like this. If it does, it’s most likely to be toward the end of the lease.

This Agreement may not be changed or...

Think Twice Before Listing Guarantors by Name

September 18, 2020    

Listing the name of the person or entity that guarantees a tenant’s lease performance in the text of the guaranty seems like a perfectly normal and sensible thing to do. But it can have unforeseen and unfavorable legal consequences. The problem is that adding, subtracting, and changing...

You Can Lose Rent Escalations If You Take Too Long to Bill Them

January 23, 2020    

Whether out of neglect or clerical error, you may forget to invoice a tenant for a tax escalation or other charge it owes you. Or, if the tenant is struggling, you might decide to keep the bill in your back pocket and wait for its finances to improve. In either case, you’re taking a risk....

Avoid Five Pitfalls When Leasing to a Non-U.S. Tenant

December 12, 2019    

Common misconception: Leasing to a foreign business is no different from leasing to a U.S. business. Truth: Leasing to a non-U.S. business raises special legal considerations. The problem is that standard boilerplate leases aren’t designed for—and thus frequently fail...

Having Tenant Initial One Lease Page May Make Provisions on Others Harder to Enforce

October 28, 2019    

Leases are long, complicated documents that only attorneys read word for word. Accordingly, landlords and other lease drafters may use different techniques to draw attention to part of the lease that they think are really important. One example is by having the tenant initial pages containing...

Don't Assume Personal Guaranties Continue After the Lease Is Renewed

September 17, 2019    

When you renew a lease that includes a guaranty from the tenant’s business principal or another third party, you might assume that the guaranty will automatically continue into the renewal term. But if you don’t get the guarantor to sign off on the renewal lease, you may be unable to...

Agreeing to Agree Isn’t Enough to Lock in a Lease Renewal

June 6, 2019    

It’s hard to determine today how much rent to charge a tenant for a lease renewal (or extension) that won’t happen until years later. It may be tempting to skirt this problem by providing for the renewal at an unspecified rent “to be negotiated” or “agreed to...

Don't Assume Anticipatory Breach Just Because Tenant Vacates

May 20, 2019    

The rule of “anticipatory breach” gives you the right to take immediate legal action against tenants that no longer intend to fulfill their remaining obligations under the lease. The catch: The tenant must make it crystal clear, whether by words or by actions, of its intent...