Lease Agreements and Attorney Review: Invest Now or Later
A SPECIAL REPORT by Tripp Scott's Matthew Zifrony as published in the FLORIDA TREND
A current or prospective tenant is presented with a lease contract with
several seemingly untenable terms. The landlord says the contract is non-negotiable. The tenant takes him at his word, quickly signs and returns the contract, and hopes nothing bad arises.
Nothing bad may happen. But the future is left to chance, in part because the tenant didn’t have an attorney review the lease contract. Whether to save money or because he felt such review was not necessary, without attorney review, the tenant has opened
himself up to potential and expensive complications down the road.
In the current commercial real estate market, where rental properties are at a premium, landlords are in the driver’s seat. The contracts they present often are “take it or leave it.” Yet, whether complex or cookie cutter, lease agreements could benefit from an attorney’s review.
Recent examples include landlords requiring tenants to take over sub-par properties in as-is condition, which in one case included the tenant assuming responsibility for code violations. In another matter, a landlord included a clause giving him the power to push out the tenant's move-in date — more than once.
Questionable contracts aren’t limited to tenant leases. Architects,
contractors, and vendors will present proposals and contracts to tenants who may possess little knowledge about the services involved. Every significant, binding contract should be reviewed by an attorney.
Legal review is like insurance. The upfront investment may seem costly. However, attorneys skilled in contract negotiations and review may identify areas of concern and open the door for negotiation of more favorable terms. Attorney review may not resolve such issues or get the landlord to remove the questionable clauses. It likely will,
however, help make the tenant aware of any issues before signing.
If the client is confident in negotiating the terms, the attorney can still review the contract and advise the client how to respond to any areas of concern. Or the attorney can be the client’s “face” in the transaction, negotiating on behalf of the client and brokering lease terms.
This can be especially helpful if the tenant is not currently in the local
market and could benefit from a local representative. A local commercial attorney may have past working relationships with the landlord’s counsel. If the tenant and landlord are in conflict over certain terms; the attorneys can help seek compromise without conflict.
It is not the attorney’s job to tell the client what they should or shouldn’t do. The attorney presents the benefits and risks in the given scenario. Ultimately, it’s up to the client to make an informed decision. This can bring peace of mind, and help leave “chance” out of the equation.