Questions to Ask Before Signing a Lease

Parties
Does the lease correctly describe both the landlord and tenant with full legal names, correct states of incorporation, and principle business addresses?

If the parties and the lease are given shorthand references, as “Lease”, “Tenant”, and “Landlord”, are they used consistently?

Term
Is the term specified by the number of years or months? Does it include the commencement and termination dates?

If the building is under construction, will the tenant receive sufficient written notice as to when the Premises will be ready?

Is the lease clear on what triggers the tenant’s obligation to move in and pay rent: certificate of occupancy, substantial completion (when the tenant can use the Premises for the intended purposes with out material interference)?

If there is a dispute regarding whether the Premises are ready, how will it be decided: by negotiation, or arbitration?

If the commencement is estimated, are the parties required to sign a letter confirming the commencement and termination dates?

Is the tenant required to give the landlord, within 30 days of occupancy of the Premises, a punch list of items to be completed?

Is the Landlord, required to complete or correct the punch list items within 30 days or be in default?

Through no fault of the tenant, what remedies does the tenant have if possession is delayed: cancellation, rent abatement, money damages,

reimbursement for prepaid moneys, such as first month’s rent and security deposit?

If a delay does occur, are the commencement and termination dates extended for a time equal to the delay?

Premises
Does the lease fully and accurately describe the Premises including the floor and suite number, street address, city, state, and zip code?

If the lease refers to attached exhibits showing the legal description, location of the premises (building) and space plan, are they attached? Are they accurate?

Does the lease specifically state the square footage of the Premises?

Does the lease define the type of square footage measurement: rentable square feet (includes portion of the common area), usable square feet (limited to the space from the center of the four walls of premises; or referring to the Building Owners and Managers Association (BOMA) standards?

If the building is still under construction, does the lease define what standard of measurement will be used to measure the premises?

Is the total rentable square footage of the building specifically stated?

Is it clearly stated what the tenant’s pro rata share of the total rentable square footage of the building is?
Relocation

If the tenant leases more than a specified number of square feet, is the landlord prohibited from relocating the tenant?

If the landlord has the right to relocate the tenant, are there limits on the number of times the landlord can relocate the tenant?

Does the lease limit where the tenant may be relocated, such as the same building or same floor?

Can the landlord relocate the tenant only if certain specified events occur, such as another tenant wants more than 75 percent of the whole floor?

Is the landlord required to give the tenant at least 60 days advance written notice of any relocation?

Must the new space be substantially the same in size, dimensions, and layout as the old space?

Must the usable square footage in the new space be equal to or greater than the old space?

Will the rent and additional rent (pro rata share not be increased during the original term and any option periods, even if the new space is bigger than the old space?

If the new space is smaller than the old space, are the rent and additional rent proportionally reduced?

Must the new space be built out similar to the old space?

Is the landlord required to pay all reasonable relocation costs, including tenant’s salaries for managing the move, moving expenses, phone transfer and changing the address on business stationery and advertisements?

To minimize the disruption to the tenants business, must the move take place over the weekend?

Does the lease change on the date the tenant moves into the new space, i.e., suite number or size of leased premises?

Does the tenant have the right to cancel the lease if it does not want to relocate?

Must the landlord provide a sign near the tenant’s old space for several months, advising people of the tenant’s new location?

Does the lease define how a dispute over whether the new space meets the relocation requirement will be settled?

Rent

Is the rent specifically stated?

If the rent is stated in more than one way, such as annually, monthly, per square foot, for the full lease term, are the amounts consistent?

If the lease begins on any other than the first day of the month, is the rent for the first month prorated?

Does the lease state how any prorations will be done, such as 360-day year or actual number of days in the month?

Does the lease provide a reasonable grace period, such as 10 days before a late payment penalty is charged?

If the lease allows for interest to be charged on any delinquencies by the tenant, is the rate reasonable?

Percentage Rent

Does the lease exclude the following from the definition of gross sales, sale and other taxes, returned merchandise, credit card discounts, interest and carrying charges, sales to employees at discount, receipts from public telephone and vending machines, revenue from delivery, bad debts?

Are the sale of fixtures and bulk sales of inventory to a succeeding tenant or a liquidator in a going out of business operation excluded from the definition of gross sales?

Does the tenant have the right to deduct minimum rent and cost reimbursements for common area maintenance, taxes and insurance from the percentage rent calculation?

Can the tenant deduct other expenditures, like the cost for preparing the space in excess of the landlord’s improvements allowance, from the percentage rent calculation?

Is the percentage rent calculation for a partial lease year, at the beginning or end of the term, based on 12 consecutive months?

Does the lease say that the minimum rent is adequate consideration and the percentage rent is in addition to such adequate consideration?

If the tenant is required not to operate another store within a certain distance (a radius clause) is the distance reasonable, allowing for the trade area’s size, shape and demographics?

Adjustments to Base Rent

If the base rent increases periodically by the Consumer Price Index (CPI), is the index to be used clearly defined?

If the original index is no longer published, is an alternative index selected?

Does the lease state the base index period, such as June 2002?

Is the increase 100 percent of the CPI increase over the base index or a lesser percentage, such as 50%?

Is there an annual or maximum cap on the increase?

If the increase is a fixed percentage, is it reasonable based upon inflation rates, market rates, and such?

Does the lease state when the increase will start on the first day of the calendar year following the lease commencement year, on the first anniversary of the commencement date, or at some point in the lease term?

Operating Expenses

Does the lease call for the rent to increase periodically by any increases in operating expenses?

Does the tenant pay its pro rata share of any increase in operating expenses over a base figure or in a net lease its pro rata share for the total operating expenses for the operating years?

Does the lease define the base figure, such as the amount of operating expenses in a calendar year or an expense stop?

If the base year is a calendar year, is the base year stated?

If the base year is a fiscal year, is the beginning and ending date stated?

Does the lease state the base year expenses?

Do the base year expenses reflect full occupancy or adjust to full occupancy?

Was the expense stop calculated by actual dollar costs of a particular year or in a new building, an estimate of operating costs?

If the expense stop is an estimate, is it reasonable and how was it made?

Does the lease specify the tenant’s pro rata share as a percentage?

Is the tenant’s pro rata share, as specified in the lease, correct?

Is the tenant’s pro rata share based on total square footage in the building instead of the square footage leased by landlord?

Is the total square footage in the building the total useable, rentable or leaseable area?

Is the measurement type for the tenant’s square footage the same as the rest of the building?

Does the lease require all expenses to be reasonable and directly related to the building’s operation?

Are any payments to the landlord’s executive personnel excluded from operating expenses?

Are costs for items that, by standard accounting practice should be capitalized (such as HVAC replacement) unless those costs reduce operating expenses and are amortized over the reasonable life of the capital items according to generally accepted accounting principles and the yearly amortization does not exceed the actual cost reduction for the relevant year, excluded from operating costs?

Are depreciation of interest (unless it is related to allowable capital item) excluded from operating expenses?

Are leasing commissions, legal fees, cost to correct original construction defects, excluded from operating expenses?

Is any increase in operating expenses due to another tenant’s “particular use” excluded from operating expenses?

Are expenses paid directly by another tenant for any reason (such as excessive utility use) excluded from operating expenses?

Are the costs for improving any tenant’s space excluded from operating expenses?

Is any increase greater than 5 percent in management fees or employees’ salaries or benefits or both excluded from operating expenses?

Is any repair or other work required by condemnation, fire, or other casualty excluded from operating expenses?

Are costs exceeding those obtainable through competitive bidding excluded from operating expenses?

Are any services provided to some tenants but not to this tenant excluded from operating expenses?

Are any costs, penalties, or fines due to the landlord’s violation of any governmental rule or authority excluded from operating expenses?

Is the landlord required to keep books and records according to generally accepted accounting principles?

Must the landlord provide a detailed list of expenses prepared by a certified public accountant (CPA) to support the increase?

Does the lease clearly give the tenant the right to audit the landlord’s books and records?

If the audit reveals a discrepancy of the lesser of $”X” or 2 percent or more, must the landlord pay for the audit?

Does the lease state how disputes over increases in operating expenses will be settled: by arbitration; by lawsuit?

Does the tenant receive a credit if the estimated monthly payments exceed the actual incurred expenses or the operating expenses are reduced?

Are any tenants excluded from contributing to the Common Area Maintenance (CAM)?

Insurance Increase

If the tenant must pay any increase in insurance costs because of its operation, is it limited to only the increase that results from the tenant’s “particular use?”

Is any increase in insurance costs due to of another tenant’s “particular use” excluded from operating expenses?

Security Deposit

Will the tenant be paid interest on its security deposit?

Does the lease allow for use of a non-wash security deposit, such as a letter of credit or certificate of deposit?

Does the lease state under what circumstances and when the security deposit will be returned?

Tenant’s Personal Guarantee

Does the financial strength and size of the tenant rule out the landlord’s need for personal guarantees?

Landlord’s Lien

Before exercising its lien and holding a sale, must the landlord give the tenant written notice at least 10 to 15 days before the sale and give the tenant an opportunity to cure the default?

Use

May the tenant use the Premises for any lawful purpose?

Do the restrictions on use in any way limit the type of business the tenant plans to conduct at the Premises?

Can the use be changed with the landlord’s reasonable consent?

If the tenant’s use is limited to the use stated in the lease and no other use, does the lease provide for: “except concerning an assignment or subletting, in which event any change in use required by the transferee shall be subject to the prior written consent of the landlord, which consent shall not be unreasonably withheld or delayed?”

Rules and Regulations

Do any current rules or regulations made by the landlord, or the landlord’s right to make future rules and regulations, interfere with the tenant’s planned business use?

Compliance with Laws

Does the landlord warrant and guarantee that the Premises comply with all municipal ordinances and state and federal ordinances and state and federal statues on the commencement date?

Is the tenant’s obligation limited to those laws that relate to the tenant’s use of the Premises?

Is there a dollar limit on the tenant’s obligation to make changes to the Premises to comply with all municipal ordinances and state and federal statues after the commencement date?

Hazardous Materials

Does the landlord warrant the absence of asbestos in the building or the Premises?

Does the landlord indemnify and hold harmless the tenant from any liability for asbestos claims?

If the landlord becomes aware of any hazardous substances, hazardous materials or hazardous wastes in the building or the Premises, is the landlord required to give the tenant prompt notice?

Does the landlord hold harmless and indemnify the tenant from any claims for hazardous substances, hazardous materials or hazardous wastes not placed there by the tenant?

Signs

Does the lease require the landlord to provide and maintain a lobby directory, floor directional and office door signs?

Does the lease prohibit the landlord from displaying signs or advertisements of the tenant’s competitors unless they are also tenants in the building or complex and have signs similar to those allowed the tenant?

Does the lease allow the tenant to post temporary signs (with reasonable restrictions regarding type, size, and style) such as, in the building lobby, and elevator lobbies?

If the tenant must obtain the landlord’s consent to post signs, must that consent be reasonable?

Can a permitted assignee or subleasee be listed in lobby directory, floor directional and office door signs?

Does the lease state who pays for the installation and removal of the signs?

Parking

Is there sufficient tenant parking and does the landlord guarantee that the number of parking spaces will not be reduced?

Is the tenant guaranteed free parking during the lease term?

Does the lease guarantee the tenant a minimum number of parking spaces?

If the tenant is not guaranteed a specific number of parking spaces, are spaces and location allocated on the same basis for all tenants?

During the lease term, is the landlord prohibited from materially changing the parking area?

During the lease term, is the landlord prohibited from imposing a fee for using the parking lot?

Is the landlord prohibited from unreasonably limiting the hours that the parking lot will be available?

Does the lease allow the tenant’s visitors to use the parking lot?

Is the landlord prohibited from unreasonably limiting the tenant’s visitors from using the parking lot?

If there is a charge for visitor parking, is it reasonable?

Can the tenant purchase discount visitor validation stickers?

Is the parking area accurately shown on exhibit attached to the lease?

Services and Utilities

Does the lease clearly state who provides and pays for such services as heating, ventilation, and air conditioning (HVAC), electric lighting, water, janitorial services?

Are the services provided during specified days and hours (such as weekdays from 6 a.m. to 7 p.m., and Saturdays from 7 a.m. to 1 p.m.)?

Are the holidays when the services are not provided specifically listed?

Are the standards that govern the landlord’s provision of HVAC services according to the standards established by the American Society of Heating and Refrigerating Engineers?

Does the lease define a measurable standard for the landlord’s provision of janitorial services?

Are the janitorial service standards specified in an exhibit, such as emptying waste baskets nightly, washing the exterior windows once a quarter?

If the services are interrupted, does the lease define the remedies available to the tenant, money damages, rent abatement, or lease cancellation?

Is the tenant automatically entitled to its remedies?

If the lease limits the tenant’s rights to remedies, are there reasonable exceptions, such as the interruption was caused by the landlord’s negligence or intentional act; the causes were not beyond the landlord’s reasonable control?

Is the tenant entitled to its remedies if the landlord doesn’t use its reasonable efforts to restore the interrupted services promptly?

Repairs and Maintenance

If the landlord is required to repair, is the obligation to repair with reasonable promptness?

If the landlord does not meet its responsibilities for repair and maintenance, can the tenant make the repairs upon 10 days notice (or without notice in an emergency), and deduct the costs of the repairs from the rent?

Is the tenant’s liability for repair and maintenance limited to keeping the leased Premises in good order and condition, and at the termination of the lease to return the Premises in the same condition as received, except ordinary wear and tear?

Does the lease state who is responsible for structural repairs?

Does the lease clearly define which items are interior, exterior, structural and non-structural?

If the tenant’s obligation includes responsibility for structural portions of the building roof, exterior walls, and building systems (HVAC, electrical, mechanical, and plumbing), has the landlord assigned its warranties to the tenant, and is that assignment legally effective?

Is there a dollar limit on the tenant’s obligation to make structural repairs?

Repairs Required by Government

Does the lease say any repairs, alterations or other improvements required by governmental authority that is required of the building in general, or similar buildings or uses in the area of the building, shall be done at the sole cost and expense of the landlord?

Does the lease limit tenant’s responsibility for any repairs, alterations or other improvements required by governmental authority that result from the tenant’s particular use of the Premises to only the Premises?

Right of Entry

Other than emergencies, must the landlord give the tenant reasonable advance notice of entry?

Exclusive of emergencies, is the landlord’s right to enter the Premises to make inspections, alterations or repairs limited to reasonable hours?

If the landlord has the right to show the Premises to prospective tenants (such as in the last three months of the lease term only), must the landlord give the tenant reasonable advance noticed?

During the landlord’s entry, is the tenant entitled to damages for any injury caused by the landlord’s negligence or unreasonable interference with the tenant’s business?

Alterations

Can alterations be made without the landlord’s consent if the alterations cost less than $”X” per square foot?

If the landlord’s consent is required, must the landlord be reasonable in exercising its consent?

Must the landlord respond within 5, 10, or 15 days following submission of a complete set of plans and specifications?

If the landlord denies its consent, is the landlord required to specify in writing why the consent was denied?

Mechanic’s Liens

Does the tenant have a reasonable period to discharge a mechanic’s lien before the landlord can pay the lien and bill the tenant?

Taxes

Does the lease exclude from the taxes the tenant pays any increase in taxes caused by a “change in ownership” or transfer of all or a portion of any estate or interest in the building?

Does the lease exclude from the taxes the tenant pays any assesment relating to the initial contstruction of the building or capital improvement (but no replacements) constructed after the tenant's occupancy?

Does the lease excluded from the taxes the tenant pays and any taxes that are payable pursuant to a separate assessment?

If the landlord expands the building after the tenant’s occupancy, does the lease exclude any increase in taxes caused by this construction until the newly constructed space becomes part of the building’s total “Rentable Square Footage,” or “Leaseable Floor Area?”

Are any rebates, refunds or abatements of real estate taxes received by the landlord after payment of taxes by the tenant refunded to the tenant on a pro rata basis with 10 days after receipt by the landlord?

Does the tenant receive credit for any rebates, refunds, or abatements of real estate taxes realized by the landlord before the tenant’s tax payment to the landlord?

Does the tenant have the right to contest the validity or amount of real estate taxes as permitted by law, either in its own name or the name of the landlord?

Is the landlord required to cooperate fully with the tenant in such tax contest?

Does the lease provide that any refunds, rebates or reductions shall first be used to repay the tenant’s expenses for obtaining such relief?

Is the landlord required to provide the tenant with the notices of assessment (or reassessment) in sufficient time to permit the tenant to contest such assessment?

If the landlord fails to notify the tenant of the assessment (or reassessment) in sufficient time to permit the tenant to contest the assessment, can the tenant exclude any increase resulting from the assessment from the taxes the tenant pays?

Assignment and Sublease

Has any clause prohibiting the tenant from assigning or subleasing the Premises been deleted?

If the landlord must consent to an assignment to an affiliated company, is “affiliated” defined?

Does the lease state specific and objective criteria for the landlord’s consent to assigning or subleasing the Premises (for example, the subtenant must have a net worth greater than “X” dollars)?

Must the landlord respond in a timely fashion to a request for consent to assignment or sublease?

If the landlord does not respond after some agreed time, such as 10, 20, or 30 days, is the transfer automatically approved?

Does the lease define the conditions needed to qualify for a change in control, merger, sale or stock, or sale of assets not requiring the landlord’s consent?

If the tenant must split any sublease profits with the landlord, does the tenant get to subtract its costs for subleasing the Premises from the sublease proceeds?

Can the tenant recover all its costs before splitting any profits with the landlord?

Does the tenant get a credit for any excess sublease “profit” payments made to the landlord if the subtenant defaults before all subleasing costs are recaptured?

Recapture of Premises

Can the tenant offer the Premises to the landlord before it has sought a subtenant?

Does the landlord have a specific number of days (15, 30, 60) to decide if it wants to cancel the lease and recapture the Premises?

If the tenant is seeking to sublease only a portion of the Premises, is the landlord precluded from recapturing the entire Premises?

Subordination

Is the tenant’s possession protected from being disturbed by a mortgage foreclosure?

Is the landlord required to obtain non-disturbance clauses from current and any future lenders?

Is the landlord required to subordinate its contingent interest in the tenant’s personal property and fixtures to the tenant’s lenders?

Quiet Enjoyment

Does the landlord covenant the tenant’s “quiet use and enjoyment” will not be disturbed during the lease term?

Estoppel Certificate

Allowing for internal corporate communication, does the tenant have sufficient time to respond to an estoppel certificate request, for example, within 10 days?

If the landlord is authorized to sign an estoppel certificate for the tenant, if the tenant fails to sign the certificate within a reasonable time, such as within 30 days, must a copy of the lease be attached as an exhibit to the estoppel certificate?

Lender Modification

If the tenant must not unreasonably withhold its consent to lease modifications requested by a lender, is the provision limited to institutional lenders only?

Does the lease say any lease modifications requested by a lender cannot alter the basic business terms (rent, location, term)?

Does the lease say any lease modifications requested by a lender cannot materially reduce any of the tenant’s rights?

Does the lease say any lease modifications requested by a lender cannot increase the tenant’s duty?

Does the lease say any lease modifications requested by a lender cannot increase the tenant’s monetary obligations?

Notice to Mortgagee

If the tenant is required to give written notice of the landlord’s default to the landlord’s mortgagee, is the notice given simultaneously to the lender as the landlord?

Is landlord required to give written notice to the tenant of the mortgagee’s address?

Insurance

Is the landlord required to carry property insurance?

Is the landlord’s property insurance policy an “all risk” policy?

Is the landlord required to carry public liability insurance?

Is the landlord’s insurer required to be licensed to do business in the state where the Premises are located?

Is the landlord’s insurer rated “A+” and “XII” or better in Best’s Insurance Guide?

Is the tenant a named insured with the landlord?

Is the landlord required to provide the tenant a certification of insurance?

If the landlord fails to provide insurance or evidence of insurance, can the tenant purchase such insurance and deduct the cost from the rent?

Does the lease require that the landlord’s certificate of insurance provide 10 days prior written notice before the insurance may be cancelled or materially modified?

Does the tenant’s policy coverage and limits meet the minimum required in the lease?

Are the landlord’s insurance requirements necessary and reasonable?

Can the tenant use an umbrella or blanket insurance policy that also covers other premises owned or leased by tenant?

If the landlord is added as an additional insured, is the landlord’s interest under the insurance policy specifically limited to the landlord’s interests under the lease?

Can the tenant supply a certificate of insurance instead of the original or a copy of the insurance policy?

Subrogation

Is the waiver of subrogation mutual?

Does the tenant’s insurance policy permit the waiver of subrogation by the landlord and the tenant?

If the mutual waiver of subrogation endorsement increases the tenant’s insurance costs, will the tenant receive a credit?

Is the waiver of subrogation unlimited, instead of limited only to the amounts of insurance proceeds actually received?

Indemnity and Hold Harmless

If the tenant must indemnify and hold the landlord harmless from claims, damages, or injuries arising out of the tenant’s occupancy of the Premises, is the tenant’s responsibility limited to any claims except those arising from the landlord’s intentional or negligent acts or omissions?

Landlord’s Liability

If the lease requires the tenant to waive all claims against the landlord for damages, or injuries, is the tenant’s waiver limited to any claims except those arising from the landlord’s intentional or negligent acts or omissions?

If the lease limits the tenant’s remedy to the value of the landlord’s interest in the building, is the tenant’s lease subordinate only if the total encumbrances do not exceed, say 75 percent of the value of the building?

Damage and Destruction

Is the landlord obligated to use due diligence to repair and restore the Premises if damaged by casualty?

Does the tenant’s rent abate from the date the Premises are damaged or access impaired, and remain abated until the damage is repaired?

Is the rent abated to the extent of the interference with the tenant’s normal business operation?

Can the tenant cancel the lease if the landlord fails to repair and restore the Premises within a reasonable period, such as 90 days?

Condemnation

Beside the taking of part or all the Premises and the tenant’s access to the Premises, does this provision also include the taking of part or all the building, common areas, and parking lot?

Is the rent abated from the date of the taking?

Can the tenant cancel the lease if the Premises are no longer suited for their intended use?

If the tenant cancels the lease, is the tenant reimbursed for prepaid rent and other prepaid expenses?

Is the tenant entitled to a share of the condemnation award for the loss of business, moving costs, tenant’s trade fixtures, other property, and the unamortized cost of leasehold improvements?

Default

If the tenant continues to pay the rent, does the lease allow the tenant to vacate the Premises and not be in default?

Is the cure period for a monetary default at least 10 to 15 days after the notice is received by the tenant?

Is the cure period for a non-monetary default at least 30 days after the notice is received by the tenant?

If the default cannot be reasonably cured within the cure period, does the lease state the tenant is not in default if it has started corrective action within the cure period and is reasonably pursuing the cure to completion?

Has all language providing for a non-curable default by the tenant been deleted from the lease?

Before exercising its remedies, must the landlord give the tenant written notice of default and give the tenant an opportunity to cure the default?

Does the lease specify that the cure period commences on the date the notice is received, personally or by mail, by the tenant?

If the cure period commences on the date the notice is personally delivered to the tenant or the date the notice was sent by mail to the tenant, is the period long enough for the tenant to cure the default?

Has language that prohibits the tenant from exercising any option, at any time during the lease term the tenant was in default, been removed?

If the tenant is prohibited from exercising any option if it is in default at the time it exercises the option or at the time the option period begins, can the tenant reinstate the option by curing the default?

Is the landlord prohibited from any unreasonable remedies, such as confession of judgment or acceleration of rent?

Is the landlord required to mitigate damages, such as making a reasonable effort to release the Premises?

Landlord’s Default

Is the cure period for a default by the landlord no longer than 30 days after the notice is received by the landlord?

Does the lease specify that the cure period commences on the date the notice is received, personally or by mail by the landlord?

Does the tenant have the right to remedy a landlord default upon 10 days notice (or without notice in an emergency), and deduct the cost from the rent?

Survival of Remedies

Do the tenant’s remedies survive the termination or expiration of the lease?

Waiver

If the failure to exercise any right is not a waiver, is this provision mutual?

Does the lease require that any waiver must be in writing and signed by the waiving party?

Attorney’s Fees

Is the successful party entitled to have its attorneys’ fees paid by the other, in any litigation, or in a dispute settled short of litigation, to enforce the lease?

Is the successful party also entitled to other reasonable expenses and court costs?

Does the lease state there can only be one successful party and defines successful or prevailing party?

Disputes

Does the lease clearly define how disputes are decided?

If arbitration is provided for, does it apply to all disputes or only those specifically defined in the lease?

Is the arbitration binding on all parties in the lease?

Is the arbitration process subject to the current rules of the American Arbitration Association?

Does the lease detail qualifications for the arbitrators?

Does the lease clearly state the process for selecting arbitrators, for example, each side selects one arbitrator and the two arbitrators then select the third arbitrator?

Pending the outcome of the arbitration, must both parties continue to perform?

Does the losing party pay for the arbitration?

If the lease requires the tenant waive a jury trial, is the waiver mutual?

If the landlord commences any proceedings against the tenant for nonpayment of rent or any other amounts due, can the tenant file a counter claim?

Notices

Is the landlord required to give notice to the tenant at the Premises and at its principal office location?

Must notices to the tenant be written, sent certified mail, and effective from the date delivered, or an attempted delivery as shown on the certified mail receipt?

Must notices to the landlord be written, sent certified mail, and effective from the date delivered, or given an attempted delivery as shown on the certified mail receipt?

If notice must be given at two different addresses, is the notice effective from the later receipt date on the notices?

Can the tenant change the address or person to whom its notices are to be sent?

Surrender of Premises

Does the tenant have the right to remove its trade fixtures at the lease’s termination?

If the tenant is required to remove the tenant improvements and restore the Premises, has that cost been calculated?

Does the lease clearly define any specific items, such as security systems, shelving, and computer cooling equipment that can be removed at tenant’s cost and expenses upon lease termination?

Holdover

If the tenant holds over, with the landlord’s consent, does the rent remain the same?

If the tenant holds over, at the landlord’s sufferance, is any additional rent or fee for liquidated damages limited to the actual damages suffered by the landlord?

Broker’s Fees

Does the lease specifically identify the landlord’s broker and the tenant broker, whose fee is payable by the landlord?

Does the landlord indemnify and hold the tenant harmless for any claims for the landlord’s broker?

Entire Agreement

Is everything the tenant negotiated, such as free rent, increased tenant improvement allowance, caps on operating expenses increases, stated in the lease and its exhibits?

Severability

If any part of the lease is declared invalid, are the remaining parts of the lease still valid?

Does the lease expressly identify those provisions that, if declared invalid, entitle the landlord to cancel the lease?

Does the tenant have the right to cancel if a critical provision is declared invalid, such as “exclusive use” clause?

Governing Law

Do the laws of the state in which the Premises is located governs the lease?

Does the lease also state the venue for an action?

Lease Not an Offer

If the landlord and the tenant do not sign simultaneously, must the lease be signed by the landlord and returned to the tenant by a certain date or becomes nullified?

Recording

Can the tenant record a short form memorandum of the lease without the landlord’s consent?

Authority

Is the corporate secretary’s certificate sufficient, or must the tenant provide a “board resolution” showing that the signer has authority to enter the lease?

Does the lease say the landlord represents and warrants that it has good title to the Premises?

Does the landlord represent and warrant that it has authority to enter the lease and that the signature on the landlord’s behalf is authorized by the landlord’s board of directors if it is a corporation?

If the landlord is a corporation, does the landlord represent and warrant that it is legally authorized to conduct business in the state?

Signature Page

Are the names of the parties and the title of the signers properly listed so there is no implied personal liability for the signers?

If the lease is subject to mortgagee approval, is the lease automatically void if the tenant does not receive written notice by a certain date that the lease has been approved?

Economic Representations

Does the landlord warrant any economic representations (for example, the base year amounts or previous operating expense escalations)?

Force Majeure

Has any risk that the landlord should bear been excluded from the general catchall provision?

Exhibits

Is each exhibit correctly marked, initialed, and dated?

If any exhibit is longer than one page, does each page show the number of pages in the exhibit (for example, Page 3 of 5)?

Are the exhibits clearly referenced in the lease?

Does the rider control if the rider and the main lease document are in conflict?

Tenant Improvements

Are all the proposed improvements itemized on the blueprints and specifications and made part of the lease by reference?

Is the landlord’s tenant improvement allowance a specific dollar amount instead of a list of items (e.g., 10 lineal feet of drywall per 150 rentable square feet)?

If the tenant will pay part of the improvement costs, does the lease clearly define what portion the tenant will pay (e.g., the excess over a fixed dollar amount)?

Does the lease state how the tenant will pay for the improvements, such as 50 percent upon completion of construction and 50 percent at commencement, over the first 12 months of the lease, amortized over the lease term?

Does the tenant have the right to remove the above building standard portion of the improvements at the end of the lease?

If the tenant pays part of the costs and the landlord selects the contractor, what control does the tenant have? For example, is competitive bidding required?

Right to Cancel

Does the tenant have the right to cancel the lease whenever, or after “X” months, with or without a penalty charge?

Must the landlord reimburse the tenant for part of the penalty if the landlord rents the Premises within a fixed period?

Right of First Refusal

If the tenant has the Right of First Refusal on any space, is the space sufficiently identified in the lease?

Must the landlord give the tenant written notice of the proposed terms and conditions and a reasonable time, such as 30 days, to respond to the offer?

Option to Renew

Does the lease automatically terminate at the end of the lease term (preventing a possible unwanted renewal)?

Does the tenant have one or more options to extend the term for “X” years on the same terms and conditions, except rent?

Is the landlord required to notify the tenant of the tenant’s right to exercise the option to renew?

Is the period to notify the landlord of exercising the option to renew reasonable?

Does the lease state how the rent for the option term is to be set, increased by a fixed percentage, the increase in the CPI, a fixed dollar amount, or the current market rate?

Does the lease define the method to be used to set “current market rate?”

Is the option rent specific enough to be enforceable, avoiding such vague phrases like “as agreed by the parties” or “to be renegotiated?”

Does the lease provide for arbitration if the parties cannot agree on the option rent?

If the rent increase is greater than “X” percentage or a specified amount, can the tenant cancel the option?

Because the landlord does not incur the cost of vacant space, rent concessions, build-out, broker’s fees, is the option rent les than market rate, say 90 or 95 percent of current market rate?

Free Rent

Is the amount and timing of any free rent detailed in the lease?

Does the free rent also include an abatement of additional rent? To prevent the tenant from losing its free rent if possession is delayed, is the free rent period defined, for example, in “months 1, 2, 3, 4 of occupancy” instead of specific dates?

If the lease states any conditions where the tenant would have to reimburse the landlord for the free rent, is the tenant’s liability limited to the unamortized portion of the free rent?

General Issues

Does the lease clearly state when it is using “business days” and when it is using “calendar days?”

Are all parts of the lease clearly identified so it would be obvious if any parts are missing?

Is every part of the lease clearly identified (for example, does the lease contain a summary of the numbered lease paragraphs and a listing of exhibits and addendum)?

Is the lease correctly dated?

Do the parties initial each page of the lease to validate it is a true part of the lease?

Does the lease clearly and accurately state each negotiated item?

Does the lease contain every item negotiated by the tenant?

Have all unreasonable or unfair provisions been deleted?

Has the real cost of the lease commitment been calculated?

Have all ambiguous provisions been clarified?

Have all open-ended obligations been closed?

Are all rights and duties clearly defined?

Is the tenant provided the same protection as the landlord by making all unilateral clauses mutual (for example, is the successful party instead of the landlord entitled to attorney’s fees and costs)?

 

Dickstein Real Estate Services

1031 Route 22 West Bridgewater NJ 08807   |   908-704-3500 X11   |   larry@dicksteinrealestate.com