- Differences with residential vs. commercial real estate leases
- Residential leases more consumer protected.
- Commercial leases are negotiable
- More business to business perspective
- This session is not all inclusive of all clauses important to a landlord but a sample.
B. PARTIES CLAUSE
- Legal name and address of the tenant
- Tenant capacity to execute agreement
- Corporate Resolution or Clerk’s Certificate
- Accurate names, address, states of incorporation
- Is the tenant name a “shell” or “parent”?
- Certificate of Good Standing
- Names to match with the signature page
C. DEATH CLAUSE
- Tenant lease termination upon death
- Sole proprietor or core person in a small company
- Termination may be due to sickness or incapacitation
- Would affect the parties clause
- Would affect lease obligations to an estate or other entities.
- Tenant imposed termination language
- States that lease is automatically null and void based on events
- Difficult for landlord to finance or sell building
D. EXCLUSIVITY AND PROHIBITED USES
- Often associated in retail leases but not always
- Will protect the tenant from competition
- Can be damaging to a landlord
- May include restrictions on leasing to certain competitors
- May prohibit competitors from the same building as tenant with the rights
- Problems of competitors in building with recruiting other employees
- Might be embarrassing if competitor’s name is on tenant’s building.
- Impose restrictions of certain uses including subletting.
- Restricting uses not in the best interest of the property/building tenants.
- Applied for signage rights
- Examples of penalties violation
- Examples: termination rights, rent abatement; rent reduction
- Landlord to avoid exclusives. Difficult to enforce.
E. RADIUS RESTRICTIONS
- Restrictions on landlord leasing to tenant competitor within an agreed trade area
- Tenant agreement to not operate in agreed trade area
- More prominent in retail leases
- Need to define radius
- Issues of tenants with multiple partners and new start-ups under different names
- Affects landlord’s percent rents, free trade and marketing other space.
- Tenant demands of an anchor tenant presence
- Penalties imposed on the landlord
- Demands for specific tenants to remain in center
- Rights to terminate as penalty
- More prevalent with in-line tenants
- Landlord wants rights to replace an anchor tenant.
- Tenant may restrict the time for replacement and the type of tenant
G. BROKERAGE CLAUSE
- Notice of real estate brokers entitled to commission
- States who will pay the brokers.
- States the real estate brokers of record
- Brokers may be asked to sign the lease
- Issues with third party “parachute” broker
- States when brokers will be paid
- Often the fee amount is per a separate letter agreement
- There is no legal standard on fee structure or timing of payment
- Brokers to hold valid and active licenses in Massachusetts for a fee
H. RELOCATION CLAUSE
- May serve as landlord’s “buy-out” or “buy-down” option.
- Gives landlord the right to relocate tenants during tenancy
- Relocation in the building or campus park.
- States landlord obligations for tenant relocation expenses
- Examples moving costs, stationary, telecommunications.
- Other landlord issues: tenant business interruption, loss of productivity, loss of clients, printing fees, equipment installations, loss of image or its utility in the space, goodwill, lose of sales, etc.
- Tenant may want comparable space.
- A need for arbitrarily exercise.
- Tenant wants to restrict relocation language
- Tenant need for advanced notice, reason for the move, specified proposed new location; same square footage; rent adjustments; paid moving costs and limit frequency
- Limit landlord relocation rights
I. HAZARDOUS WASTE/ENVIRONMENTAL ISSUES
- Stipulates tenant will not create or possess hazardous waste in the building
- Defines hazardous substance and penalties.
- Landlord need for protection from environmental liens on the property
- Landlord need to limit financing damage and sale of a property.
- Review MGL Chapter 21E
- Landlord review of tenant’s operation and material
- Tenant should be aware of other tenants that could be in violation
- January 2009 can now hold owner responsible even if owner has protection
- Examples of tenant exclusions
- Review AUL (Activity and Use Limitations) issues
- Landlord requirement to list AULs in commercial lease
- Tenant right for assessment report status an setting baseline report
- Designates an area for tenants, employees and guests to park vehicles or trucks
- States time allowed, days of week and other rules.
- Issues for landlord offering exclusive parking
- Landlord lease language for common parking, non-exclusive, non-designated basis
- Differences of Designated vs. Allotted
- State first come, first serve
- Issues for overflow parking in retail
- Other items to address: weekend parking and customer parking
- Difference issues between office v. retail buildings
- Addressing employee density and parking space allotment.
- Advantages to state cars per 1,000 sf or a specific number of parking spaces.
- Zoning restrict issues with expansion of parking or tenant’s use
- Other key issues for landlord
- Parking definition, covered parking, visitor parking
- Discouraging parking and encouraging use of mass transit
- Snow pile issues with parking allocation
- Eminent domain issues
People also viewed...
You recently viewed...
Personalization is OFF. Your personal browsing history at Mass.gov is not visible because your personalization is turned off. To view your history, turn your personalization on.
Learn more on our .
*Recommendations are based on site visitor traffic patterns and are not endorsements of that content.