Commercial Investment Real Estate March/April 2017 | Page 21

The test of a successful lease
is not when everything
goes as planned.
Legal Protection
Leases are generally long, complex, and printed in small type.
Designed to mirror a partnership agreement, the lease sets out
the parameters of the business relationship.
The test of a successful lease is not when everything goes as
planned. Success comes from overcoming the bumps in the rela-
tionship. Without a carefully drafted lease, a minor bump can
turn into a major headache.
Typically, the Standard Form Lease represents the wishes of
the landlord, which is why modifi cations are usually necessary.
The ultimate goal is that the language of the commercial lease
protects both parties if one of them exhibits a lack of integrity,
or if outside events, such as natural disasters, intrude into the
relationship. A couple of examples include:
Leases are usually granted for a fi xed period of years. What
if the tenant experiences a serious economic setback? Could the
term be ended early? Generally, this would be allowable only if
the landlord has agreed to such an option in the lease.
What if the tenant fi nds a crack in the foundation, and this
crack expands into a full-blown problem following a minor
earthquake? Are there provisions in the lease which will protect
the tenant?
It is advisable that tenants limit their repair responsibility to
the extent possible, preferably keeping the responsibility to in
no worse state than at the signing of the lease. This requires a
comprehensive checklist on the condition of the property, which
will protect not only the tenant but also the landlord.
A well-documented negotiation could have the landlord’s
responses made to each request in bold type from the tenant.
This allows for the back and forth requests and responses to be
tracked and more easily understood. A tenant checklist can help
when reviewing the landlord’s Standard Lease Form and can help
the landlord address each issue.
Being aware of commercial real estate trends, forecasts, data,
and analytic information can offer both sides an advantage during
lease negotiations. Also, recording corporate meeting minutes
can p rovide a valuable historical window into a company’s history,
helping the lease negotiations. In the end, the old adage “the devil
is in the details” holds true with a commercial lease.
Morris H. Lilienthal is a lawyer with Martinson & Beason, PC,
a law fi rm in Huntsville, Ala. Contact him at morris@
martinsonandbeason.com.
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ApRIL
26-28
2017
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For more information, visit iiusa.org/dc2017
March | April 2017
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