Believe (In Your Terrace)!

A young leasing attorney makes a mistake.

Maybe he or she could not stay awake reading a mind boggling expansion provision. Or perhaps forgets to bill the client an exorbitant amount. It happens.

The proper response?

Yell and scream?

No.

Instead, tell them “Sometimes your favorite animal is a goldfish because it has a memory of only ten seconds. That’s where we need to be.”

What? Actually, that was not me talking — that was Quin Snyder, the coach of the NBA Utah Jazz channeling Ted Lasso while talking to a player post screw-up.

Yeah, I finally jumped on the Ted Lasso bandwagon.

For the unfamiliar, Ted Lasso is a streaming television show about a goofball folksy American football coach brought on to manage a losing English Premier League soccer club.

Soccer. You know, that game that does not let you use your hands (why can’t you use your hands?).

Not important.

The point is that Ted Lasso (played by Saturday Night Live alum Jason Sudeikis) does not know anything about “the beautiful game”, is constantly ridiculed and is expected to fail at every turn.

But Coach Lasso knows what he is doing when it comes to people. He remains constantly upbeat and friendly and (surprise!) wins over everybody.

Corny, I know, but maybe we need a little corny these days and the success of the show makes me think that (many) others agree.

But even more astounding is that (according to the Wall Street Journal), actual coaches who get paid fortunes to yell and scream on the sidelines are buying into a more empathetic Lassoian (is that even a word?) approach.

Besides Coach Snyder, Steve Kerr, of the NBA’s Golden State Warriors and Monte Williams of the NBA’s Phoenix Suns are fans and the NBA’s Atlanta Hawks put the word “Believe” on their warmups — the same word Ted plasters all over his apartment and office.

I would try a similar approach with landlords and their counsel but they are not goldfish. More like Tasmanian Devils with the memory of an elephant.

Not much can make a commercial office tenant more upbeat than the right to use a building setback as a terrace.

This is not an easy right to obtain from a landlord, and there are a lot of hoops to jump through to meet legal and building requirements for use, but once in place an outdoor space can be a huge tenant amenity.

Follow these twelve suggestions to make your lease setback provision overflow with optimism:

  • Gotta ask. Not every space has a usable setback area and landlords do not freely offer this amenity. You will need to agree on the basic parameters in your term sheet.
  • Exclusive Use. You should have the exclusive right to use the setback as long as you occupy the entire floor where the setback is located. Attach a detailed plan specifying the area as an exhibit to your lease.
  • Tie to the premises. Your use of the setback should be appurtenant to your right to occupy your premises. There should be no additional rental for such use, but you should understand that the terms of your lease will apply to the setback (e.g., insurance, indemnity, compliance with laws, etc.).
  • Address legal status. The local municipality will undoubtedly restrict the type of use of your setback and an amendment may be required to the building’s certificate of occupancy, particularly if the number of users require some form of public assembly permit.
    • Your lease should specify the parties’ relative responsibilities to obtain such approvals.
    • You will need to work with your architect and/or project manager to determine the specific permitting requirements based on your intended use and number of expected users.
    • If you are responsible for permitting, your lease should require that your landlord cooperate in all reasonable respects (at your expense), including executing and delivering required applications, reports and documents.
  • Address consents. Your landlord should represent as to any parties whose consent is required for your use of the setback (e.g., superior lessors or mortgagors) and again be obligated to reasonably cooperate in obtaining such consents.
  • Confirm alterations. Your lease should indicate responsibility for any improvements to your setback. Often, the tenant must take the space “as is” other than for specified landlord alterations, if any (which landlord alterations should be performed in accordance with applicable laws).
    • If your landlord needs access to the setback to complete its work after delivery of the premises to you, then it should use commercially reasonable efforts to minimize any interference with the performance of your work and/or your conduct of business.
    • It is reasonable for your landlord to limit your right to make alterations so any intended alterations should be pre-approved. Additional alterations should be subject to the same standard as with improvements elsewhere in your lease (i.e., consent not unreasonably withheld subject to industry standard requirements). Your landlord should only withhold consent to alterations that are structurally detrimental to the building, violate legal requirements, create unsafe conditions or adversely affect the operation or appearance of the building.
    • Make sure you provide for electricity, water and any other necessary utilities on the setback and for the responsibility to connect those services to the main building systems.
    • Limit your obligation to remove your alterations at the end of the term since they likely enhanced the area, although you will be required to remove your furniture and other personal property.
  • Tenant property. You will want the right to install furniture, fixtures, plants and similar property on the setback. Ideally, your landlord’s rights to consent should be limited to safety concerns and load requirements.
  • Address repairs. You will likely be responsible for cleaning (including snow and ice) and your landlord may require that it perform needed repairs at your (reasonable) cost, but make sure your landlord is responsible at its own cost for maintenance of, and any damage to, the roof membrane (probably under warranty), exterior walls and other structural elements of the Building unless caused by your own negligence or willful misconduct.
  • Signage. You may not be allowed to install any signage or graphics on your setback but provide exceptions for directional and safety-related signage.
  • Limit access. Your landlord will need access from time to time but limit to reasonable times upon reasonable notice (except in emergencies) and require that your landlord repair any damage caused by such access.
    • Many large office buildings keep window washing and other equipment on their setbacks or at a minimum require access to the setbacks to perform window washing. Limit your landlord’s ability to keep such equipment on your setback (often it is possible for the equipment to be attached to the building itself). You also need to determine how your furniture, fixtures and plantings will be moved and returned (and at whose cost) when your landlord needs access to perform work.
    • Preclude your landlord from performing work (except in emergencies) that interferes with any pre-planned events on your setback.
  • Rules, rules, rules. Your lease may provide that your use of the setback will be subject to reasonable rules and regulations promulgated by your landlord. Limitations on cooking, noise, hours of use etc. are understandable but best worked out beforehand in your lease and any modifications should not adversely affect your use other than to a de minimis extent.
  • Other tenants. Many landlords will require the right to suspend your use of the setback if you disturb other tenants or occupants. That is reasonable as long as the determination is not your landlord’s alone to make. Ideally, any disagreements should be subject to expedited arbitration or at least a reasonableness standard.

“I believe in hope. I believe in Believe.” A typical Ted Lasso quote. Follow the dirty dozen suggestions above and you can believe your lease setback provision will be inspired.