landlord ’ s consent or approval is required under this lease , such consent or approval will not be unreasonably withheld , conditioned or delayed .”
• Delivery Date . Although the lease will likely specify a target date for delivery of the space , most leases say that the landlord is not liable if it misses that target , and that the tenant remains obligated to take the space whenever the landlord finally delivers it – even if it ’ s 5 years later . Always include a “ drop-dead ” date by which the space must be delivered or the tenant can terminate the lease .
• Landlord ’ s Repair Obligations . Landlord ’ s leases tend to be inappropriately brief in discussing the landlord ’ s repair obligations . At a minimum , the landlord should be required to maintain and operate the property in compliance with all applicable laws , and in a manner comparable to comparable buildings in the same metropolitan area . Specific maintenance obligations imposed on the landlord should include : ( i ) structural repairs to the building ( s ), including the floor slab ; ( ii ) maintaining the roof in good condition and free of leaks ; ( iii ) maintaining the surfaces and components of all exterior walls ; ( iv ) keeping the property clean and properly drained ; ( v ) keeping the parking areas and free of snow , ice , water and other obstructions ; ( vi ) maintaining and repairing all paved portions of the property , including parking lot striping ; ( vii ) maintaining all landscaping ; ( viii ) maintaining all utility lines to the point of entry to your space and any lines located beneath the floor slab of the space ; and ( ix ) maintaining all electrical and mechanical systems other than those that exclusively serve your space . The landlord should be required to commence repairs within 30 days after written notice from the tenant , or within such shorter period as may be reasonable in the event of an emergency ( the tenant shouldn ’ t have to wait 30 days for the landlord to fix a huge hole in the roof ).
• Pro Rata Share . Leases for multi-tenant properties generally state that each tenant is responsible for its “ pro rata share ” of the operating costs , real estate taxes and insurance charges relating to property . Although most leases calculate each tenant ’ s share as a percentage of the “ leasable ” space on the property , some landlords will change “ leasable ” to “ leased .” The difference can be enormous . If you are a 5,000 square foot tenant in 100,000 square foot building , and your pro rata share is based upon “ leasable ” square feet , your share will be 5 %. If your share is based on the “ leased ” square footage of the property , and all of the other tenants move out , you will find you suddenly have 100 % of the leased space and are responsible for 100 % of these charges !
• Landlord ’ s Insurance and Waiver of Subrogation . Since the landlord ’ s cost of insuring the building is typically passed through to the tenants on a pro rata basis , the tenants should get the benefit of that insurance . This means that if a tenant accidentally leaves a coffee pot on and burns down the building , the cost of rebuilding should be paid by the landlord ’ s insurance and the tenant should not be liable to the landlord for that cost . Two things are important here : first , the lease should require the landlord to maintain full replacement cost coverage on the building , and second the lease should contain a mutual “ waiver of subrogation ” clause that says that neither party will make a claim against the other for any loss that is covered by the injured party ’ s insurance .
• Tenant Improvement Allowance . Getting landlords to actually hand over the tenant improvement allowance can sometimes be problematic . One standard condition for the payment of the allowance is that the tenant must provide the landlord with signed lien releases from all of the tenant ’ s contractors , subcontractors , and suppliers . But what happens if a subcontractor who did $ 500 of work on the project can ’ t be found or simply refuses to provide a lien waiver ? In most cases , this means the landlord will refuse to disburse any portion of the allowance , even if the $ 500 at issue is only a tiny fraction of the total allowance . A tenant can avoid this problem by including language that states that : ( i ) if the tenant cannot provide a lien release from a particular contractor , subcontractor or supplier , the landlord can only hold back an amount equal to the value of the work provided by that particular contractor , subcontractor or supplier ; and ( ii ) upon the expiration of the statute of limitations for the filing of a mechanics lien ( which is typically 90 days after the work was performed or the materials were delivered ), if the tenant can show that no lien has actually been filed , the landlord must release any withheld funds .
Of course , there are many more potential pitfalls for a tenant in a typical lease . As with any agreement , a tenant ’ s best defense will be to make sure it reads and understands its lease , and obtains competent legal counsel to help with the review and the negotiation process .
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