drdafting and neogiating commerical leases

DRAFTING AND NEGOTIATING

COMMERCIAL LEASES Presented by: Sco/ Weber

Today’s Topics: •  Tips for effec,ve lease nego,a,on

• Avoiding hidden or easily-‐missed issues

• Properly iden,fying “business decisions”

• Q&A; Discussion.

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Effective Lease Negotiation

• Avoiding over-‐reliance on lease forms • Knowing the deal; knowing the par,es • Use of term sheets and leGers of intent • Appropriate use • Key provisions • Binding v. non-‐binding provisions

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Hidden Issues

• Property Measurement • Rentable Square Footage (can impact rent, pro rata share, and improvement allowance) •  Ini,al measurement issues; BOMA standards (and others) •  Is there a right to measure or re-‐measure (aSer LL or T work)? What if the lease is silent? • Use of “approximate” figures

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Hidden Issues (continued) • Compliance with Laws • Rela,onship to permiGed uses – cau,on •  Limit to compliance in opera,on of premises • Get LL rep as to current status and legality of permiGed use • ADA issues •  Environmental issues

• Related provisions – compliance with restric,ve covenants, etc.

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Hidden Issues (continued) • Redelivery Issues •  Typical requirements include delivery in broom clean condi,on, subject to normal wear and tear • Other “excep,ons” to consider • Removal of altera,ons/improvements • Rela,on to “compliance with laws” issue

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Hidden Issues (continued) • Opera,ng Expenses/Pass-‐Throughs •  Limit to actual expenses incurred by landlord •  Limita,ons on true-‐ups • Real Estate Taxes – should carve out or exclude any taxes arising due to a Landlord transfer, change of control, etc. •  Limi,ng management fees and other controllable expenses • Gross-‐up provisions

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Hidden Issues (continued) •  Events of Default •  Limi,ng “automa,c” defaults, and knowing which ones are appropriate to remove/modify •  Examples: • Abandonment •  Insurance • Delivery of estoppels and SNDAs

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Identifying “Business” Decisions • PermiGed Uses and Trade Names • Considera,ons for Landlords and Tenants • Other lease provisions impacted • Related concept – prohibited uses

•  Signage • Considera,ons for landlords and tenants •  Impact on other lease provisions

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Business Decisions (continued) •  Insurance • Ques,ons to ask • Related lease provisions; impact on treatment of rents; etc.

• Assignment and Subleang •  Factors to consider

• Others: • No,ces; late charges and default interest; delivery of financial informa,on; rules and regula,ons

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Q&A Ques,ons welcome.

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drdafting and neogiating commerical leases

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