Best Commercial Lease Clauses (formerly titled Insider's Best Commercial Lease Clauses) is a working tool that will help commercial property owners and managers—and the professionals who advise them—structure their leases safely and effectively. This all-in-one handy resource provides guidance on how to formulate a commercial lease that is to your advantage, while keeping your tenants satisfied. It gives concrete suggestions on how to plug dangerous loopholes, stay within legal boundaries, and stop trouble before it begins.

Best Commercial Lease Clauses provides in-depth information on more than 60 different topic areas, such as:

• Alterations
• Bankruptcy
• Damage and Destruction
• Cotenancy
• Environmental Issues
• Insurance
• Limitations on Liability
• Operating/CAM Costs
• Pre-Lease Agreements
• Safety and Security
• Specialty Leasing Issues
• Work Letter Agreements

The 2009 Edition includes the best articles as originally published in the Commercial Lease Law Insider, the authoritative how-to monthly publication that provides the best commercial property management advice in the industry. The pages of Best Commercial Lease Clauses is filled with input from numerous leading professional across the country, including top leasing attorneys and real estate professionals, who provide their shrewd insights and astute, field-tested judgment—all in plain-English terminology.

The book's format has been redesigned from a two-volume loose leaf to an all-in-one sourcebook that commercial property owners and managers conveniently keep on their desk as a quick reference guide.

This easy-to-use book also includes Examples, Practical Pointers, and more than 200 Model Tools, including Model Lease Clauses, Model Agreements, Model Letters, Model Checklists, and more.

FREE Bonus CD: As a bonus, Best Commercial Lease Clauses comes with a free, companion CD-ROM that contains all of the Model Tools included in the book, and that owners and managers can put to immediate use.

Table of Contents

Preface

Table of Model Tools

Chapter 1: Abandonment

• Limit Your Duty to Relet After Abandonment or Eviction
• Get Control over Abandoned Fixtures, Furniture, and Equipment

Chapter 2: Access to Premises

• Cut Risks When Giving Tenant Pre-Lease Inspection Right
• Reduce Crime by Limiting After-Hours Access to Your Building or Center

Chapter 3: ADA and Leases

• Give Worried Tenants Assurance on ADA Compliance in Common Areas
• Minimize Owner's ADA Obligations on Tenant Buildout
• Require Tenants to Inform You of ADA Violation Notices
• 12 Ways to Minimize Your Risk of ADA Liability

Chapter 4: Alterations

• Extend Deadline on Installation Removal Option to Help You Relet Space
• Set Limits on Promise to Refurbish Tenant's Office
• Specify Items as 'Fixtures' to Avoid Tenant's Removing Them at Lease's End
• Control Contractor Headaches When Tenants Expand
• Protect Yourself from Liability Stemming from Your Approval of Contractors

Chapter 5: Audits

• Limit Tenant's Right to Audit Your Books and Records
• How to Limit What Tenant Can Review During Audit
• Check for Underreported Sales with Solid Audit Rights

Chapter 6: Bankruptcy

• Get Post-Bankruptcy Protection from Shopping Center Tenant
• How to Reduce Impact of Tenant Bankruptcies

Chapter 7: Buildouts

• Safeguards When Lending Tenants Improvement Allowances
• Protect Your Wallet When Tenant's Costs Exceed Improvement Allowance
• Protect Yourself if Tenant's Consent Right Threatens Your Buildout Deadline
• Get Six Vital Protections if You Make TIA Progress Payments

Chapter 8: Commencement of Lease

• Five Methods to Choose from When Setting Lease Commencement Date
• How to Prepare an Effective Commencement Date Notice

Chapter 9: Concessions

• Set Six Limits When Agreeing to Pay Tenant's Moving Costs
• Protect Yourself in Free-Rent Deals
• Compromise on Requiring Defaulting Tenant to Pay Back Rent Credit

Chapter 10: Condemnation

• Bar Tenant from Sharing in Condemnation Award

Chapter 11: Consent

• Get Reminders to Respond to Consent Request if Your Silence Equals Consent

Chapter 12: Continuous Operation

• Inducing Strong Tenants to Accept Continuous-Operation Clause
• 15 Key Lease Requirements to Keep Tenant Open and Doing Business
• Cut Risk of Dark Space with 'Promise to Open' Compromise

Chapter 13: Cotenancy

• Limit What Tenant Can Get if You Violate Cotenancy Clause
• Limit Cotenant's Remedies When Stores Go Dark

Chapter 14: Damage and Destruction

• Avoid Responsibility for Damage Suffered by Tenant
• Avoid Costly or Impractical Restoration After Fire or Other Casualty
• How to Protect Yourself if Tenant's Space Is Damaged
• Key Protections When Licensing Portion of Center's Lot for Business Activity

Chapter 15: Default

• Negotiate Key Items in Lease's Default Clause
• Avoid Surprise Claims When Suing a Defaulting Tenant
• Include 13 Items in Comprehensive Tenant 'Event of Default' Definition
• Add Six Remedies to Discourage Chronic Lease Violations

Chapter 16: Description of Premises

• Do Not Put Square Footage or Dimensions in Lease
• Get Two Protections if You Must Put Square Footage in Lease

Chapter 17: Dispute Resolution

• Boost Office Renewal Rents by Setting Favorable Arbitration Guidelines
• Use Expedited Arbitration to Control Tenant's Special Rights
• Do Not Let Arbitration Clause Delay Eviction Process
• Protect Your Right to Sue a Foreign Tenant or Foreign Guarantor
• Trouble with a Tenant? Consider Mediation Before You Arbitrate

Chapter 18: E-Commerce

• How to Cut Risks When Renting to E-Commerce Tenants
• Take Precautions When Accepting Right to Buy Dot-Com Tenant's Stock

Chapter 19: Electricity

• Avoid Costly Disputes over Tenant's Electricity Provider
• Avoid Tenant Lawsuits, Damage Claims over Electricity Shutdowns
• How to Avoid Liability if Power Goes Out
• Protect Against Unexpected Increases in Tenant's Power Consumption
• Get Tenant Cooperation to Save on Utility Costs

Chapter 20: Environmental Issues

• Require Tenants to Get Environmental Insurance
• Lease Provisions that Cut Risk of Indoor Air Quality Problems
• Limit Tenant's Use of Hazardous Substances to Prevent Big Cleanup Bills
• Give Tenant Pre-Occupancy Inspection Right Instead of Risky Environmental Indemnity
• Use Environmental Audits to Pin Pollution Responsibility on the Right Tenant

Chapter 21: Estoppel/Lender Agreements

• Negotiate Financeable Leases to Obtain Future Loans
• Avoid Estoppel Certificate Disputes by Getting Tenant's Preagreement to Representations
• Protect Against Risks of Signing Estoppel Certificate for Tenant
• Prevent Unsigned Estoppel Certificate from Jeopardizing Your Financing or Sale

Chapter 22: Exclusives

• Strategies to Reduce Scope and Impact of Tenant's Exclusive
• Limit What Tenant Can Get if You Violate Its Exclusive
• What to Put in a No-Exclusives Clause in Your Retail Lease
• Agree to Landlord Leasing Covenant to Keep Center Free of Exclusives

Chapter 23: Expansion Option

• Give Expansion Option, but Lessen Your Risks

Chapter 24: Exterior Appearance

• How to Make Sure that Tenant's Storefront Looks Good
• Make Tenant Conceal Rooftop Equipment
• Get Right to Erect Scaffolding Without Tenant Retaliation

Chapter 25: Guaranty

• Plug Costly Loopholes in Your Tenants' Lease Guaranties
• Safeguards to Avoid Getting Burned by Guaranty with Decreasing Dollar Cap
• Get Right to Demand Alternative Security if Guaranty Becomes Worthless
• Make Guarantor Pay Despite Settling with Tenant
• Flexible Application of Security Deposit for Tenant Good-Guy Guaranty

Chapter 26: Holdover

• Do Not Get Stuck with Low Rent and High Costs if Tenant Holds Over
• Avoid Disputes When Enforcing Tough Holdover Clause

Chapter 27: HVAC

• Spell Out Right to Keep Air-Conditioning System
• Make Tenant Pay Utility Costs for Its Supplemental HVAC System
• Set Reasonable Charge for After-Hours HVAC Service

Chapter 28: Improvements

• Control Your Share of Lease-End Capital Improvement Costs
• Add Safeguards to Lease When Providing Tenant Improvement Allowance
• Place Limits on Costs Covered by Tenant Improvement Allowance

Chapter 29: Insurance

• How to Ensure Tenants Will Pay Your Entire Insurance Cost
• Pass Through Your Building's Insurance Deductibles—But Set Limits
• Set Requirements on Tenant's Blanket Insurance Policy
• Make Sure Tenant's Contractor Is Adequately Insured

Chapter 30: Lease Signature

• Get Proof That Partnership or Corporation Has Authority to Sign Lease
• Ensure that Tenant's Electronic Signature Is Authentic
• Protect Yourself if You Sign Marked Leases

Chapter 31: Letter of Credit

• Get Lease Protections Against Letter of Credit Risks
• Require Letter of Credit, Not Bond, to Protect Against Tenant's Alterations

Chapter 32: Letter of Intent

• Cut Risks When Using Letter of Intent
• How to Use a Conforming Lease Without Getting Hurt

Chapter 33: Limitations on Liability

• Save Your Limited Liability When Strong Tenant Makes It a Deal Breaker
• Update Lease to Address War, Terrorism, and Bioterrorism
• Protect Yourself if You Cannot Deliver Office Space When Lease Starts

Chapter 34: Marketing/Promotion

• Should Shopping Center Tenants Be Required to Advertise?
• How to Set Up a Promotion Fund for Your Shopping Center
• Get Right to Use Tenant's Trademark and Logos in Your Marketing Materials

Chapter 35: Memorandum of Lease

• Protect Yourself When Signing Memorandum of Lease
• Get Signed Memorandum of Lease Termination Upfront

Chapter 36: Nondisturbance

• How Tenant Can Get Favorable Nondisturbance Agreement
• Prevent Tenant from Killing Your Chances of Future Financing

Chapter 37: Notices

• Get Second Chance to Respond to Sublet or Assignment Request
• Safeguards Avoid Defaults, Lost Rights Due to Overlooked Notice
• Set Automatic Election or Face Uncertainty if Tenant Does Not Make Choice

Chapter 38: Operating Expenses

• Items to Include in Your 'Operating Expenses' Definition
• Operating Expense Wish List
• Pass Through Costs of Cost-Saving Capital Improvements
• Persuade Prospective Tenants to Accept Fixed CAM
• Negotiate Smart Capital Replacements Pass-Through Clause

Chapter 39: Parking

• Charge Tenant if Its Employees Park in Customers' Spots

Chapter 40: Percentage Rent

• Get Audit Rights Giving You Solid Protection
• Get Right to Disclose Confidential Gross Sales Info When Necessary
• End Lease or Raise Rent if Percentage Rent Falls Too Low
• Motivate Tenant to Give You Annual Sales Report on Time
• Include Off-Site Sales in Restaurant Lease's 'Gross Sales' Definition
• Collect Percentage Rent on Slotting or Placement Fees
• Do Not Base Percentage Rent on Named Tenant's Gross Sales

Chapter 41: Pre-Lease Agreement

• Get Reimbursed for Your Costs if Prospective Tenant Backs Out of Deal
• Get Reimbursed for Cost of Architectural Plans if Lease Deal Falls Through
• Site Plan Disclaimer Gives Maximum Flexibility, Protection

Chapter 42: Radius Restriction

• Maximize Customer Traffic with Airtight Radius Restriction
• Tie Performance-Based Kick-Out Right to Radius Restriction
• Get Tough with Remedies for Radius Clause Violations

Chapter 43: Recapture

• Protect Yourself in Recapture Option While Easing Tenant's Sublet Efforts
• Negotiate a Recapture Option if Powerful Tenant Goes Dark
• Get Recapture Option by Letting Tenant Share Your Profit
• Trade Recapture Right for Tenant's Right to Go Dark

Chapter 44: Refusal Right

• Set Limits on Tenant's Right of First Refusal to Buy Space
• Terminate Lease if Tenant Does Not Exercise Refusal Right to Buy Space for Development

Chapter 45: Relocation of Tenant

• Get Relocation Right with Smaller Shopping Center Tenant
• Cut Disputes Over Acceptability of Tenant's Relocation Space

Chapter 46: Renewal of Lease

• Key Points to Cover in Your Renewal Option
• Bar Financially Weak Tenant from Exercising Renewal Option
• End Special Rights/Remedies if Retail Tenant Renews Lease

Chapter 47: Renovation

• When Can an Owner Close Off One of Tenant's Entrances?
• Protect Tenant's Visibility and Access Without Hurting Yourself
• Prevent Tenant from Interfering with Shopping Center Remodeling or Expansion

Chapter 48: Rent Escalation

• Raise Rent After You Expand or Add New Anchor
• Get Right to Raise Rent to Fair Market Value if Tenant Sublets or Assigns
• Lease Additions to Boost Rent, Revenue

Chapter 49: Rent Payment

• Recover Unaccrued Rent After Regaining Possession of Space
• Call All Monies Owed by Tenant Additional Rent to Speed Up Nonpayment Proceedings
• Use Get-Tough Lease Clause to Discourage Chronic Late Rent Payments
• Key Points in Fair Rent Acceleration Clause
• Guarantee Rent Flow When Tenant Exercises Purchase Option

Chapter 50: Rent Reduction/Deferral

• Use Rent Review If Tenant Demands Lease Renegotiation
• Require Tenant to Improve Space for Lower Renewal Rent
• Get Right to End Reduced Rent if Tenant Defaults

Chapter 51: Restrictions on Landlord

• Do Not Hurt Yourself When Agreeing to Protect Tenant's Visibility
• Attract Strong Tenants to Phased Development Without Caving into Demands
• Add Definition of 'Including' to Avoid Inconsistencies

Chapter 52: Safety and Security

• Place Limits on Tenant's Supplemental Security Measures
• Limit Liability by Modifying Standard Office Building Safety Clause
• Require Tenants to Comply with Fire Evacuation Plan
• Do Your Leases Allow Response to Health Epidemics?

Chapter 53: Security Deposit

• Include Key Points in Security Deposit Clause to Get Maximum Protection
• Collect Security Deposit from Prospective Tenant Taking Early Occupancy
• List Eight Potentially Costly Events that Allow Security Deposit Increase
• Get Extra Security Deposit from Tenants that Use Lots of Water

Chapter 54: Self-Help Right

• Include Nine Items for Airtight Owner's Self-Help Right
• Protect Your Warranties from Being Voided by Tenant's Self-Help Effort
• Make Sure Lease Clearly Spells Out Your Self-Help Eviction Right

Chapter 55: Signage

• Negotiating Building Name and Signage Issues with a Major Office Tenant
• Prevent Disputes Over Removing or Covering Signs During Building Work
• Ways to Keep Control Over Tenant Signs
• Three Requirements to Avoid Incomplete or Sloppy Signage Removal

Chapter 56: Specialty Leasing Issues

• Get Three Protections in Commercial Condo Leases
• What You Should Know About Leasing to Federal Agencies
• Avoid the Common Pitfalls of Franchise Leasing
• Get Guaranty When Renting Space to Limited Liability Entity
• Medical Office Tenant's Cleanup Responsibilities, Remedies
• Consider Factors Before Converting Property to Mixed Use

Chapter 57: Sublet/Assignment

• Set Key Conditions in Your Assignment Consent
• Get Piece of Tenant's Assignment Profit
• Get Protection if Tenant's Lender Wants to Assign Lease or Sublet Space
• Keep Original Tenant on Hook When You Modify Assigned Lease
• Prevent Tenant from Evading Sublet Consent Requirement
• Get Right to Collect Rent Directly from Subtenant if Tenant Defaults

Chapter 58: Tax Escalator

• Two Strategies if Tenant Refuses to Pay for Tax Appeal
• Make Sure Tax Clause Covers Future Government Taxing Strategies

Chapter 59: Tenants

• Protections When Renting Retail Space in Office Building
• Require Tenant to Supply Financial Information if It Stops Being Publicly Traded Company
• Get Protections When Filling Space with Short-Term Charity Tenant
• Include 15 Protections in Food Court Lease

Chapter 60: Termination

• Limit Tenant's Right to End Lease or Reduce Rent if Gross Sales Lag
• Get Key Protections When Giving Tenant Termination Option
• Add Internet Sales to Gross Sales to See if Tenant Can Use Kick-Out Right

Chapter 61: Use

• Tie Chain Tenant's Store Operations to Specific Store
• Renting to 'Bank' Could Allow More Uses than Anticipated
• Get Right to Terminate Big Box Tenant's Lease if It Proposes Use Change
• Avoid Disputes Over What Are 'Primary' and 'Secondary' Uses
• Make Exceptions to Certain Offensive Uses
• Control Health Care Tenant's Use of Space

Chapter 62: Work Letter

• Get Work Letter Protection if Tenant Delays Your Completion of Improvements
• Work Letter Agreements Ensure Renovations Run Smoothly
• CD-ROM Table of Contents

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