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                            Issues Related to
                  Commercial Property Leases

Provisions Related to Lease Operation

The following are several issues that should be addressed
within the lease that relate to the operations of landlord and
tenant during the term of the lease.

- Maintenance.  Who will be maintaining the areas and
improvements that comprise the leased premises, the building
the leased premises is located within, and the larger
development the leased premises is part of, should be clearly
and precisely stated in the lease.  Typically the tenant maintains
the leased premises and the non-structural portions of the
building that make up the leased premises.  The landlord
typically maintains the structural components of the building
(please note, the roof is not considered a structural component
of the building therefore if the landlord is to maintain the roof,
which is typically the case, then the roof must be specifically
addressed in the lease) and the common areas outside the
leased premises.  The landlord also causes the other leaseable
areas of the development or project to be maintained by other
tenants.

- Common Area Maintenance (CAM) Charges.  What will be
charged to tenants by and though CAM costs should be
specifically described in the lease and the areas within the
project and the improvements that will be maintained with the
CAM collections should also be specifically described in the
lease.  Administrative fees or management fees are sometimes
added by landlords to defray the administrative costs
associated with the maintenance of the project.  This is
understandable from the landlord’s perspective, but tenants will
often want such administrative or managerial costs capped so
that the landlord can not simply charge the tenants the
administrative or management fee it desires without limits.

- Renewals.  With tenants having difficulties continuing to
operate their businesses and landlords trying to keep tenants in
their shopping centers, there have been many deals struck
lately between landlords and tenants to amend the terms of
leases.  A typical deal is the landlord grants a reduced rent for a
period of time and the tenant may agree to some concession on
their part such as extending the term of the lease.  When
negotiating such deals, you should be conscious of the terms of
the underlying lease deal and how the revised terms will fit into
that structure because you are only changing certain terms of
the lease and all other terms and conditions of the lease are
continuing.

An example where the underlying lease terms must be
considered is if the landlord agrees to grant the tenant reduced
rent for a period of time, you could have confusion if there is not
that much time remaining on the underlying lease.  If the new
deal is for 24 months at a reduced rate but there are only 20
months remaining on the underlying lease, does that mean that
the lease ends after 20 months or has it been extended to 24
months.  This is even more confusing if the lease includes an
option for the tenant to renew the lease – would this mean that
they have exercised their option to renew the lease for the
entire renewal term?

These issues are coming to light more frequently as landlords
attempt to keep tenants in their projects.

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Law Office of
Craig W. Little, P.A.