Commercial real estate leases are typically lengthy, complex documents that impose substantial obligations, liabilities and risks over many years. Handling them often involves a significant back-and-forth negotiating and drafting effort involving both the client and its lawyer that can be time-consuming and costly. Lease provisions are often determined by subjective judgment rather than objective criterion and, therefore, may vary significantly from lease-to-lease and depart from the mission, values and strategic plan of the company. Achieving consistency among lease provisions in a portfolio can be a challenge for any landlord or tenant, but is particularly difficult for parties that are subject to a different form of lease for each deal. Landlords and tenants, especially those with large lease portfolios, may wish to consider whether their procedure for completing lease transactions is as efficient and consistent as it could be.
How can leasing efficiency and consistency be improved? The initial lease draft could contain numerous compromises to reduce the amount of negotiation. However, to reduce negotiation significantly, the compromises would probably need to be so severe as to be unacceptable. Similarly, leases could be made very short and simple, but a document that lacks specificity and invites future disputes would also not likely be acceptable. The negotiation strategy could be adjusted to compromise much less or much more in an attempt to save time. Any efficiency gained from a modification of the party’s negotiation strategy, however, would probably be outweighed by the obvious adverse results. Having a standard lease or lease rider form would help ensure that the process begins with consistency, but still would subject the final lease provisions to the outcome of the negotiation process (unless the form is presented on a take-it-or-leave-it basis, which is generally not feasible). The solution to improving the lease transaction process, therefore, does not appear to lie totally in the negotiation strategy or the use of a standard lease form.
Please see full alert below for more information.
Firefox recommends the PDF Plugin for Mac OS X for viewing PDF documents in your browser.
We can also show you Legal Updates using the Google Viewer; however, you will need to be logged into Google Docs to view them.
Please choose one of the above to proceed!
LOADING PDF: If there are any problems, click here to download the file.