Edit ModuleShow Tags

5 Mistakes to Avoid When Leasing a Property

Leases can be complicated agreements to negotiate


Published:

Leases can be complicated agreements to negotiate. While each deal is different, there are some situations that arise repeatedly in my practice.  Below is a list of common mistakes that are ignored or overlooked in preparing a lease, and how to avoid them.

Handshakes

We all want to believe that everybody will always be reasonable. But while I wish that was the case, people forget, they change their minds and sometimes deals die. Additionally, it is usually easier to negotiate advantageous terms before a problem arises.  Yes, it takes time and the need for critical thought, but the effort benefits both parties. Oral agreements to lease lasting longer than one year are void under Colorado statute 38-10-108.

Know when payment starts

Some leases commence on a certain date, while other leases commence on the occurrence of some future event.  Sometimes one portion of rent is due at the beginning and another portion of rent starts at a later date.  Anticipate different scenarios that may impact timing to avoid putting yourself in a position where you are paying money but not getting anything in return.

Pay attention to insurance

There are tradeoffs between delegating responsibility for maintaining insurance and controlling insurance proceeds in the event of accident. While it might be easier to have the other party handle insurance coverage, the parties may have different interests when it comes to the timing and quality of necessary repairs. 

Getting out mid-term

Prudent businesspeople avoid boxing themselves into a corner. It is common for a lease to include language that facilitates a landlord’s ability to finance or market a property.  The other side of the lease is more nuanced.  Landlords and tenants should always carefully negotiate the assignment and subletting provision to control the process for finding a substitute occupant. 

Understand the expiration

All leases come to an end at some time.  A landlord and tenant may have different ideas of what remains and what must be removed from the premises upon expiration.  A landlord may want to keep equipment, fixtures and improvements that will make the premises more marketable to future occupants and require removal by the tenant of any equipment, fixtures and improvements that are costly to remove or do not provide value to future occupants. Likewise, tenants want to retain the right to remove equipment, fixtures and improvements that are useable at other locations or retain value, and otherwise, abandon such items that are expensive to remove and repair.  Clear language in the lease allows the parties prepare in advance.

The consequences for making these five mistakes in commercial leasing can be expensive.  Hiring a commercial real estate attorney to negotiate favorable contract terms on your behalf allows you to avoid these issues and many more. When it comes to commercial leasing, hire experience.

Robert Fischer is an attorney at the Fischer Law Office. With two decades of experience, Fischer is one of Colorado's leading commercial real estate attorneys. He provides a full range of transactional legal services for professionals looking to buy, sell or lease commercial real estate. 

Edit Module

Get more content like this: Subscribe to the magazine | Sign up for our Free e-newsletter

Edit ModuleShow Tags

Archive »Related Articles

Colorado Companies Leading Surge in Health Care M&A

While Colorado is generally known for snowy peaks, great microbrews and, in recent years, a budding marijuana industry, Fortune 500 mainstays like UnitedHealth Group are finding that the state is also ripe for life sciences transactions.

Building the brand that is Jennifer Kupcho

The 22-year old golfer, Jennifer Kupcho, shares her journey from Westminster's Ranch Country Club to playing in 19 professional tournaments on the LPGA Tour, in which she made more money than all but 38 players. And now, she's gearing up to play in 26 tournaments.

6 Questions with Colorado Women’s Hall of Fame Inductee Velveta Golightly-Howell

Throughout her career, working at the local, state, regional and federal levels, Howell has become a role model for other African American women and girls. Currently, she serves as one of twelve appointees to the Robert Wood Johnson-funded Colorado Healthcare Reform Executive Steering Committee and Turning Point Initiative.
Edit ModuleShow Tags
Edit Module


 

Edit ModuleShow Tags
Edit Module
Edit ModuleShow Tags Edit ModuleShow Tags
Edit ModuleShow Tags Edit ModuleShow Tags
Edit ModuleShow Tags Edit ModuleShow Tags