Lease Comments- Office and Industrial Tenant Broker
So this is an area I really need to improve on. Any suggestions on how to learn to redline a lease when representing a tenant? Appreciate the help.!
[{"id": "gbdmmzp", "text": "Hire a lawyer?\n\nEDIT:  will be helpful and add more info.  As a leasing lawyer I say it\u2019s a battle between what I call the \u201cmenu\u201d (all feasible tenant oriented spins on a particular provision) and reality (cost to negotiate and obtain those changes, time to get the deal done, and leverage).  That is further constrained by the LOI and the \u201cintent of the parties\u201d.  So you need to know both what you could ask for and what\u2019s actually achievable, the latter coming only with experience.  Then you go through provision by provision and run this analysis, then you go back and see if it all works together.  Then there is the list of \u201csilent issues\u201d which are things the Landlord may conveniently forget (like a landlord default clause, non-disturbance, quiet enjoyment, ability to do rent offsets, etc).\n\nMore complicated would be understanding how a provision might change in a particular context (say the casualty provision in a single tenant or multi tenant building).\n\nIf you have a low leverage tenant, you should seek only a short list of must-haves and live with the rest\u2014 for me those are usually (1) making sure the tenant doesn\u2019t have to pay huge capital expenses like a new HVAC, elevator or roof, (2) making sure Landlord cannot charge rent before the Tenant can actually occupy the space and (3) having some mechanism for rent abatement if Tenant can\u2019t actually use the space (with the number of hoops Tenant has to jump through to be negotiated).  These are usually the only things a tenant will actually call their lawyer about a year after the deal is done.  Plus a few others (ability to do cosmetic alterations, limitation on taxes to pass through, etc). \n\nThis is not legal advice.", "replies": [{"id": "gbdyxl5", "text": "Excellent answer.", "replies": [], "depth": 2}, {"id": "gbek6tl", "text": "This is spot on. As a leasing attorney myself, I would just add waiver of subrogation as an important provision that the tenant should at least try to understand, if not negotiate, prior to signing.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gbe3gmc", "text": "As a former broker gone real estate lawyer, if the redlines are anything beyond changing business points, hire a lawyer. It is REALLY easy in real estate for a broker to end up practicing law without a license. In general, it really is just about reading every lease you can get your hands on and understanding them so that you know what good and bad leases look like and finding other clauses and such you like. Best Practice would be to hire a lawyer/firm to draft up a lease template for you/your team/your firm to use where you can pick and choose which provisions to use depending on the LOI and negotiations.", "replies": [{"id": "gbe6h9b", "text": "Interesting. I feel like more lawyers become brokers, than brokers become lawyers.", "replies": [{"id": "gbe8d9w", "text": "Agreed. I just happened to fall into an offer I couldn't refuse. I do miss those months when I was making $70k in ten days but also don't miss the months of dry spells. Consistent paychecks were a nice change of pace lol", "replies": [], "depth": 3}], "depth": 2}, {"id": "gbe8xd8", "text": "It\u2019s all business points. Just trying to learn what issues to identify and changes to be made.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gbewjys", "text": "You don't and understanding that is the most important thing you should know as a broker.  You mark it up for comment to identify issues that do not match the deal terms you negotiated or are not industry norms then have their lawyer make those changes as well as provide a legal review.  \n\nDo not ever indicate you are providing a legal review, you are not licensed nor have the experience for that.  You do (or should) have the experience to do a review for deal terms and industry norms.  That does not involve drafting language or advising on language (again unless your advise is \"this sounds weird, have your lawyer review this section as I have xyz concerns\")", "replies": [], "depth": 1}, {"id": "gc18u8b", "text": "As others have said, perhaps some additional info/background is needed. Pretty much, unless you\u2019re filling in the standard blanks, consult an attorney.", "replies": [], "depth": 1}, {"id": "ggdi8d4", "text": "Yes have your clients hire good attorneys. It\u2019s best if you recommend an experienced attorney to multiple clients and you\u2019ll see how they redline leases. Pay attention to the changes and the advice they give your client. As a tenant broker, I will provide initial redline/comments and send to my clients attorney for review. This speeds up the process and saves my clients money. But in no event would I do that if they weren\u2019t hiring an attorney to also review the lease afterwards. \n\nAlso check out Larry Haber and leasing reality. It\u2019s a website that has a TON of good info on lease clauses and what they mean from a tenant and landlord perspective.", "replies": [], "depth": 1}]