Leasing Illustrated

A monthly newsletter on navigating the leasing process, for commercial office and retail tenantsby Alan Katz

Rogue Subleases and Landlord Consents (February 2017)

In most instances, leases require landlord approval of tenant proposed subleases. Even if the landlord chooses not to exercise recapture rights, approves the subtenant and reviews and approves the sublease document, the landlord, tenant (i.e., sublandlord) and subtenant will need to enter into the landlord's formal written consent to sublease document. In today's issue, we focus on eight issues to cover in such written consent to sublease. Read on…

Subordination Tranquilo and Attornment Agreements (January 2017)

Subordination, non-disturbance and attornment agreements protect the possessory rights of tenants after their landlord has defaulted under its mortgage or ground lease. In today's issue, we focus on seven issues to cover in your subordination, non-disturbance and attornment agreement. Read on…

Breaking all the (Lease) Rules (December 2016)

You often hear people say that rules are made to be broken. That certainly seems to be "the rule" in 2016. But violating the rules and regulations under a commercial lease can lead to a host of problems for a tenant, even default. In today's issue, we focus on six essential points to cover regarding the rules and regulations under a commercial lease. Read on…

The Bear Necessities of Recapture (November 2016)

Generally, a tenant will have to accept some form of recapture in connection with a proposed assignment or sublease unless it has a good deal of leverage. When a landlord recaptures by subleasing back the space that the tenant intended to sublease, it presents particular challenges and risks to the tenant. In today's issue, we focus on seven issues to address with recapture subleases. Read on…

Debating "Gross Up" Provisions (October 2016)

Tenants need to protect themselves from aberrations in their base year for operating expenses to avoid being hit with unexpected (and potentially large) escalation payments in later years. The way to do that is with a "gross-up" provision that is fair to both the tenant and the landlord. In today's issue, we focus on six issues to cover in your lease's gross-up provision. Read on…

Batman, Robin and Your ROFO Rights (September 2016)

As tenants consider their long-term needs for space, expansion options such as rights of first offer, rights of first refusal and specified expansion options can be valuable tools. In today's issue, we focus on points to address when negotiating a right of first offer. Read on…

The Desolation of... Your Real Estate Tax Base Year (August 2016)

Tenants must make sure that their real estate tax base year properly reflects a fully stabilized and assessed building. This is of particular importance with a newly constructed building or one which is undergoing a substantial renovation. In today's issue, we propose approaches to allow for normalization of your real estate tax base year. Read on…

Self-Help, NBA Style (July 2016)

If a landlord does not meet its obligation to make repairs or complete construction, it can be very helpful for a tenant to have the right to make the repairs or complete the work itself. This is known as a right of "self-help". In today's issue, we propose seven issues to address in a tenant's self-help provision. Read on…

Poetic License (June 2016)

A tenant may sometimes find the need or opportunity to license a portion of its leased premises, perhaps as part of a "desk sharing" right or some other charitable or profitable arrangement. In today's issue, we propose eight issues to cover in a tenant's license agreement. Read on…

Beep, Beep. Escalation Clauses and Wile E. Coyote (May 2016)

In many leases, landlords govern the timing of their ability to invoice tenants for operating expense and real estate tax escalations by the local statute of limitations, but at the same time severely restrict the time for their tenants to object to overbilling of these same escalation payments. In today's issue, we offer six suggestions to even up the playing field regarding the imposition of time periods to audit and remedy errors in billing operating expenses and real estate tax escalations. Read on…

You Know Nothing, Jon Snow (about Lease Guarantees) (April 2016)

Unless the guaranty provides otherwise, guarantors of commercial leases remain on the hook for their guaranty obligations even if the tenant entity is sold or the guarantor is no longer part of the tenant's management. In today's issue, we look at how to protect lease guarantors by providing the right to a substitute or replacement guarantor. Read on…

Silver Anniversaries and Sidewalk Sheds (March 2016)

Commercial buildings do not always fare so well over time and in today's issue we look at how retail tenants can protect themselves when their landlord needs to perform work on the building and erects scaffolding and sidewalk sheds in front of their store. Read on…

The Broker Exclusive Awakens (February 2016)

Commercial leasing brokers are an essential part of the leasing process, but before that process begins you should enter into a comprehensive agreement detailing the relationship and providing necessary protections. In this issue we look at the twelve things every tenant should address in an exclusive broker agreement. Read on…

Landlord Access: I Hear You Knockin' But You Can't Come In (January 2016)

All landlords will, at some point, need access to their tenants' spaces. From a tenant's perspective, this right of access should have limitations and not be so broad as to become unduly burdensome. In this issue we look at how a tenant can protect itself in its lease from an overly intrusive landlord. Read on…

Taking a Stand on Fair Market Rent Arbitration (December 2015)

Perhaps the toughest issue on a lease renewal is the determination of the fair market rent for the renewal term. A well-drafted lease will create an arbitration procedure that is equitable and will provide an incentive for both parties to come to terms rather than arbitrate. In this issue we look at an approach that we recently encountered in a lease with a large national institutional landlord that was overreaching and which we hope is not the start of an inequitable trend. Read on…

Alterations: Like Déjà Vu All Over Again (November 2015)

Tenants and landlords have to balance the tenant's need for freedom to build out its premises to its own specifications and the landlord's interest in its building. This balance is easiest to achieve with respect to the initial alterations at the beginning of the lease term, but tenants need to maintain the flexibility to perform alterations later on in the term. In this issue we look at methods to provide tenants such flexibility for future alterations and improvements. Read on…

The Amazin's and Subordination (October 2015)

Commercial leases are filled with pitfalls and traps for the unwary and tenants should always be looking a few steps ahead to avoid potential trouble. This need for wariness makes New York Mets fans, with expectations of doom in their DNA, natural born commercial tenants. In today's issue we look at how caution requires that all tenants pay close attention to their lease's subordination provisions. Read on…

True Detective and Your Lease Renewal (September 2015)

All tenants hope for a happy Hollywood ending to their tenancies and sometimes the happiest ending involves renewing the lease and keeping a good thing going. In that instance, the tenant and its landlord need to agree upon the rental for the renewal term. In this issue we look at ways to create a fair and equitable process to determine the rental for a tenant's renewal term. Read on…

Weather Proofing Your Turnkey Buildout (August 2015)

Any construction project will require a number of changes in direction along the way and a turnkey buildout by your landlord is no exception. In this issue we examine how to build in the flexibility under your work letter to make necessary changes when your landlord is performing the initial tenant alterations. Read on…

Ground Lease Regalia (July 2015)

Many leases are subject and subordinate to underlying superior ground leases, although too often tenants do not perform the proper due diligence to understand and properly assess the risks associated with such ground leases. In today's newsletter, we look at six issues to cover when your lease is subject to a ground lease. Read on…

Ya Gotta Prepare! Mets Hats and Other Hazardous Substances (June 2015)

Many leases are silent about issues which experienced tenants know must be raised in order to protect their tenancy. In today's issue we look at one of these issues; how your lease addresses the presence of hazardous materials. Read on…

A Forecast of Unseasonable Holdover (May 2015)

The sound of the crack of the bat and just a hint of warmth are both sure signs of spring, even if winter took its sweet time moving on. In today's issue we look at what happens when tenants need to take their sweet time moving on and how to best protect themselves under their lease's holdover provision. Read on…

A Sublease of Ice and Fire (April 2015)

Although some might say all commercial lease documents are unintelligible, this is particularly true for subleases. Some would even say that the structure of including some parts of the overlease while excluding other parts simply does not work without a little blind faith. In today's issue we look at subleases, in particular which provisions of the overlease need to be included and which excluded in order to create a fair and working document. Read on…

Condominium Provision of a Different Color (March 2015)

Commercial leases often attempt to cover every conceivable change in circumstances over the course of the lease term, even if such changes are not necessarily all that likely. In today's issue we look at leases that attempt to protect the landlord in the event it chooses to convert its building to a condominium form of ownership and what tenants need to do to protect themselves in those circumstances. Read on…

Hug-Gate and Net Leases (February 2015)

Certain things in life can make you cringe and that includes what we are covering in this month's newsletter. We are not referring to the writing, although that may have been the first thing that popped into your mind. In today's issue we look at the differences between a net or ground lease and a typical office or retail lease and focus in particular on how casualty and restoration provisions should be handled in a net lease. Read on…

Philae Phanatics and the Future of Leasing (January 2015)

Between comet landings and the sun setting on 2014, our attention has turned to "dah future". In today's issue we look at various industry prognostications on the future in commercial real estate, and cull from the many interesting ideas floating around in space seven trends regarding commercial leasing. Read on…

Car Talk and Future Options (December 2014)

When a tenant becomes a sublandlord it has to think like a landlord, and this becomes apparent when entering into a brokerage agreement with the subtenant's broker or its own sublandlord's broker. In this issue, we discuss six suggestions to address renewals, expansion, rights of first offer, rights of first refusal and other future options in your brokerage agreements. Read on…

You Cannot LOL At The New Accounting Standards (November 2014)

As the Financial Accounting Standards Board and International Accounting Standards Board work through the creation of new accounting standards for leasing, commercial leasing actors wait in anticipation and with a certain sense of dread. In this issue, we discuss four areas to focus upon in preparation for the new accounting standards. Read on…

Between a Rock and Your Casualty Provision (October 2014)

Sometimes necessity is the mother of invention, and that can be true when disaster befalls your tenancy in the form of a fire or other casualty. But in order to exercise that inventive spirit, you will need a casualty termination right that gives you the flexibility to actually invent appropriate solutions. In this issue, we discuss six termination rights to cover in your lease casualty provision. Read on…

Bridge Too Far (September 2014)

In every lease, the landlord and tenant must allocate their respective responsibilities in terms of complying with applicable laws, rules and regulations. In this issue, we suggest eight approaches when negotiating the compliance with laws provision of your lease. Read on…

When Space Contraction Is Your GOOOAAAAAAAAL!!! (August 2014)

When leasing new space, a tenant should remain focused on the possible need to eventually reduce such space. Maintaining the flexibility to do so can be extremely valuable, not only over the course of a long lease term, but also up front at the beginning of a transaction. In this issue, we discuss nine areas to focus upon when negotiating a lease contraction option. Read on…

Would You Believe, Confidentiality? (July 2014)

Keeping a secret in commercial leasing is nearly impossible, with many loose lips on every transaction. Yet, tenants must be careful when landlords look to impose confidentiality limitations. In this issue, we discuss seven points to cover when addressing confidentiality in your lease or when entering into a confidentiality agreement. Read on…

What's In a Name? (June 2014)

On very rare occasions, a tenant has an opportunity to have some influence as to the name of its building. This is of particular concern for a large tenant making a significant investment in its leasehold premises who does not want to end up in a building named for a rival entity. In this issue, we discuss five issues to address regarding the naming of your building. Read on…

The "Bracketology" of Assignment and Subletting Profit (May 2014)

Sometimes a tenant has the opportunity to assign or sublease unneeded space for more than the cost to the tenant for such space. But many leases do not allow the tenant to actually come out ahead, based on the share of any profits that must go to the landlord and on how that "profit" is calculated. In this issue, we discuss six suggestions to help you retain your fair share of assignment and subletting profit.. Read on…

The Mother of Dragons and Your Lease (April 2014)

Our newsletter usually discusses issues within the four corners of your lease. But there are many other consultants and vendors (and their agreements) that need to be focused upon in order to have a successful lease transaction, such as architects, project managers, engineers, and the like. In this issue, we discuss eleven essential points to address when contracting with such consultants and vendors. Read on…

Gold Medals, Curling and Your Lease (March 2014)

The Winter Olympics are here and our attention turns to outdoor fun. Here, at Tenant Illustrated, we are most intrigued by the enormous construction cost overruns at this Olympics. When even dictators with absolute power cannot keep control of construction costs, you know that it is no easy feat for tenants. In this issue, we discuss nine items to focus on to keep your construction costs in line when your landlord is building out your space. Read on…

Snapchat and Loss Factors (February 2014)

Without being too philosophical, some of the best things in life disappear too quickly. I am not just thinking of my youth or the hair on top of my head. In commercial leasing "usable" square feet can be reduced to "rentable" square feet (and even usable square feet may not be the "carpetable" square feet you were expecting). In this issue, we discuss your ever shrinking space and provide four issues to focus on to understand what you are really getting in terms of space. Read on…

Why Cure a Default Today that You Can Always Cure Tomorrow? (January 2014)

We all procrastinate; some more than others. Okay, me more than some. But when you procrastinate on your lease obligations it is called a default. In this issue, we suggest six ways to protect yourself with respect to defaults that by their nature cannot be cured within the short cure periods provided under most leases. Read on…

Green (Bearded) Monster and Your Signage (December 2013)

We all have different notions of aesthetics and marketing value and this can often lead to conflicts between owners and tenants in terms of signage. This applies with respect to office, retail, or even warehouse or industrial space. In today's newsletter, we suggest seven signage necessities for you to cover in your lease. Read on…

Ferris Bueller and Your End of Lease Obligations (November 2013)

Many leases impose significant obligations on tenants to remove the alterations and improvements in their premises at the end of the lease term. Essentially, the landlords in these situations are attempting to impose on their tenants "turnkey" work required to deliver the premises to the next tenant. In today's newsletter, we suggest five methods to avoid this costly burden. Read on…

Avoid Half Measures When Addressing Rent Abatements (October 2013)

Many leases do not provide the common remedy of a rent abatement if the landlord does not meet its obligations to provide services or make repairs or, if rent abatement is provided, the remedy is drafted in such a way as to be of limited use to the tenant. In today's newsletter, we suggest eight essential features for your rent abatement provisions. Read on…

Lease On A Hot Tin Roof (September 2013)

Although one of our familiar mantras is that tenants must always preserve the unfettered right to assign or sublet in connection with a sale of its business, restaurant leases present particular challenges. In today's newsletter, we suggest six approaches to follow in today's market where landlords have been looking for greater control regarding the operators of their retail restaurant spaces. Read on…

The High Wire Act of Landlord Consents (August 2013)

Nothing is more frustrating to a tenant than discovering for the first time after its lease is executed that the landlord has a right to consent (or worse has a right not to be reasonable in granting or withholding its consent) to something that the tenant feels is critical to its tenancy. In today's newsletter, we suggest seven items to cover to help a tenant keep its balance when addressing its landlord's obligation to consent. Read on…

The Bogie and Bacall of Leasing (July 2013)

Assignment and subletting are the Bogie and Bacall (Batman and Robin?) of leasing in that they are always paired together. Yet, while subleasing is very common, assignments are quite rare. In today's newsletter, we suggest six things to consider when addressing assignments of your lease. Read on…

Reservations About Landlord Consents (June 2013)

Even when a landlord conceptually agrees to a sublease, the consent form used by the landlord can require a quid pro quo for such approval which may have never been contemplated under the lease. In today's newsletter, we suggest five things to keep in mind when negotiating a landlord's consent to your sublease. Read on…

Fire Breathing Assignment and Subletting Clauses (May 2013)

Many clients voice the often valid complaint that lawyers get too bogged down in details and definitions. In our profession's defense, however, there are many instances where a failure to focus on the details and definitions can be very costly during the term of your lease. In today's newsletter, we suggest four ways that focusing on the nitty gritty of your assignment and subletting provision can be crucial for a multi-tiered tenant. Read on…

Force Majeure: Ad Infinitum and Ad Nauseum (April 2013)

As with many legal documents, leases are often filled with phrases and terms that are not commonly used and, quite frankly, do not always make a whole lot of sense to most tenants. It certainly does not help when these phrases and terms are in Latin. In today's newsletter, we look at four concerns to consider with the term "force majeure", which is often relegated to the dark and murky world of boilerplate, but which can prove troublesome if ignored. Read on…

Avoiding the Shadow of Duplicative Escalation Charges (March 2013)

This February has brought us a number of traditions. Some fun, such as groundhogs in Pennsylvania, and some not as much fun, such as shoveling. But being overcharged for escalations is a leasing tradition that we all hope to avoid. In this newsletter we examine four ways to avoid duplicative charges under an office lease's escalation provisions. Read on…

You Cannot Win When Auditing the Harlem Globetrotters (February 2013)

The most effective way for a tenant to protect itself with respect to an operating expense escalation is to conduct a lease audit. In today's newsletter, we talk about four issues that you should address in your lease to maintain your ability to conduct lease audits with auditors that will be best able to provide this protection. Read on…

Use Our Cleaning Service and Nobody Gets Hurt (January 2013)

Some of the fees under a lease can be downright criminal, but often of greatest concern are the landlord's hidden profit centers. For example, landlords generally require that tenants use third-party cleaning contractors engaged by the landlord, but many times these are affiliates of the landlord. In this newsletter we examine six ways to protect yourself from exorbitant fees for cleaning in an office lease. Read on…

A Generator for Your Lease (December 2012)

With the onslaught of Hurricane Sandy, this certainly has been an eventful month for those of us in the New York-New Jersey metropolitan area. Our hearts and prayers go out to the families that lost loved ones and suffered property damage. Mintz & Gold's offices were also closed for one week and we appreciate the patience of our friends and clients as we worked to get things up and running again. In today's newsletter, we discuss four things to consider in your lease in the event of similar disasters and casualties. Read on…

When Your Lease Charges You For Luggage (November 2012)

Every lease includes all kinds of fees and charges, many of which can be hard for a tenant to understand, particularly when being charged an additional "administrative" fee to boot. In this newsletter we examine the problems of one tenant being charged such an administrative fee on top of the fees and charges for the landlord's services, even though no such administrative charge is permitted under its lease. Read on…

It Ain't Easy Being Green (October 2012)

In this newsletter we take a look at the real estate leasing side of the ongoing debate about sustainability and the value of going "green". If you end up the tenant under a "green lease", make sure to cover our six suggestions set forth below to ensure that the terms are equitable. Read on…

Gold Medals and Electricity Rent Inclusion (September 2012)

As a long hot summer draws to a close, our thoughts drift from gold medals to electricity to run our air conditioning, and we manage to link Olympic events and lease electricity escalations in one newsletter (do not try this at home). Follow our nine essential provisions so that you can prevent being gouged by an electricity rent inclusion clause that becomes an excessive profit center for your landlord. Read on…

The Lease Legacy (August 2012)

One of the most important aspects of an assignment/subletting provision in a lease is to make sure that the tenant retains sufficient flexibility to complete business transactions without interference from its landlord. Not surprisingly, many landlords' initial drafts do not permit the necessary flexibility; but what is surprising is that some tenants fail to address this concern in the final negotiated lease. Avoid this pitfall by covering the nine essential areas of assignment/subletting flexibility suggested in this month's newsletter. Read on…

Good Guy Guaranties and the Designated Hitter (July 2012)

In this newsletter, we analyze "good guy" guaranties and the six most important points to address as a guarantor. Since the scope of these guaranties has expanded over the years, guarantors need to be vigilant in protecting their interests. Read on…

Letters of Credit and the Game of Thrones (June 2012)

In this newsletter, we cover four important things to focus on regarding obtaining letter of credit security deposits. In too many transactions the letter of credit is left until the end of the process, causing costly delays that could have easily been avoided. Read on…

Relocation and Tim Tebow: Here Today, Gone Tomorrow (May 2012)

Moving your office or retail store is never easy, but it is particularly difficult when you are forced to move. In this newsletter we focus on relocation provisions, including the ten most important issues to cover to limit the disruption to your business caused by a relocation instituted by your landlord. Read on…

The Fishy Side of Fixed Annual Base Rent Percentage Escalations (April 2012)

Almost every office and retail lease provides for some form of escalation of the base or fixed rent. These escalation provisions can create an ocean of problems for unsuspecting tenants. In this newsletter we focus on four of the most important issues to cover with fixed annual base rent percentage escalation provisions. Read on…

Top Ten Ways to Address Recapture (March 2012)

Assignment and subletting rights form a crucial part of a tenant's future planning and exit strategy, but a landlord's recapture rights can throw a roadblock into a tenant's plans. In this newsletter we focus on the top ten issues you should try to address in every recapture provision. Read on…

Term Sheets and Exploding Muffins (February 2012)

Welcome to the inaugural issue of our E-newsletter for commercial office and retail tenants. In our first newsletter we focus on term sheets, including the four important things to keep in mind with every term sheet. Read on…

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