Traps to Avoid

A Signed Letter of Intent Isn't a Binding Lease

January 27, 2023    

A signed letter of intent (LOI) is often the preliminary step to a commercial lease. The LOI typically requires the sides to keep the deal confidential while outlining the crucial terms of the lease they both ultimately intend to sign. However, while it may feel like a commitment, the LOI is...

Don't Agree to Keep CAM Costs “Competitively” Priced

January 3, 2023    

Tenants that must pay common area maintenance (CAM) or operating costs typically want assurances that landlords will keep those expenses reasonable and in line with the average costs that owners of other shopping centers or office buildings in the area pay. And if the tenant has bargaining clout...

Lease Debt Liability Clauses May Not Bind Government Tenants

December 22, 2022    

Finding a financially stable tenant that you know won’t go out of business and will have the financial resources to pay its rent every month no matter how long the lease lasts is every commercial landlord’s dream, especially in these tough economic times. That’s why it might be...

Don't Agree to Keep CAM/Operating Expense Costs “Competitively” Priced

November 29, 2022    

Tenants that must pay common area maintenance (CAM) or operating costs typically want assurances that landlords will keep those expenses reasonable and in line with the average costs that owners of other shopping centers or office buildings in the area pay. And if the tenant has bargaining clout...

"No Representations" Clause Doesn't Bar All Fraud Claims

October 24, 2022    

It’s a clause that almost every commercial lease contains, yet rarely gets even 10 seconds of attention. The clause says something to the effect that “Landlord has made no representations to Tenant other than those contained in the terms expressly stated in this Lease.” The...

Must You Use a CPA to Calculate Lease Costs?

July 5, 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...

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...