The Importance of What's Missing

Excerpted from From Handshake to Closing: The Role of the Commercial Real Estate Lawyer

By Sidney G. Saltz

Clearly, if a purchase contract is drafted by the seller, it may not have the warranties the purchaser is looking for. Loan documents may not have the right to prepay or the right to have insurance proceeds made available to the borrower to rebuild after a fire or other casualty.

Because leases generally are drafted by the landlord's attorneys and it is in the landlord's interest to blanket the issues (whereas it is in the tenants interest to have the unfettered right to use the space as it wishes, so long as the tenant pays there rent), there is usually not much that is not covered in the lease being reviewed on behalf of the tenant. Still, there are many matters which may not be covered at all in the landlord's draft. Those matters may include:

• The landlord's obligation to provide building security,
• Remedies for damages if the tenant defaults,
• Exclusives (in the case of a shopping center lease),
• The tenant's right to expand or extend,
• The tenant's right to grant to its lender a security interest in its personal property (and the landlord's obligations to sign an agreement with the tenant's lender, which will enable the tenant to get a loan so secured),
• The tenant's parking rights,
• Agreements by the landlord to comply with laws applicable to the property  as a whole,
• Protection against service interruptions and provision for after-hours services,
• The tenant's rights to satellite dishes on the exterior of the building,
• Payment of commission to the tenant's broker.

Certainly, some or all of these matters may have been the subject of the original handshake deal between the landlord and the tenant. Others may not have been considered at all. If the lease happened to have been drafted by the tenant, it will most certainly omit matters which are important to the landlord. In this case, the person reviewing that lease should have a copy of the landlord's standard lease in front of him or her, to see what is omitted and to respond accordingly.

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