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Current Leasing Law and Techniques: Forms

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Checklists, model forms, and in-depth examination of types of lease provisions help counsel negotiate techniques and draft the forms necessary for a variety of leasing transactions, while tables of forms and checklists make the attorney’  s research even easier. Regarding the forms, more than 80 model forms and clauses are included in an easy-to-use disk. This collection enables the practitioner to easily integrate the clauses from the disk into existing documents, and covers a variety of lease transactions.

Topics discussed in Current Leasing include:

• Legal formalities relating to leases.
• The rights and obligations of the landlord and tenant.
• Tax considerations in real estate leasing.
• Agreements with brokers, managing agents and third parties.
• Basic lease provisions, including provisions for rent and additional rent, defaults, boilerplate, and options to renew, to purchase, and to expand.
• Assignments, subletting, and lease takeover agreements.
• Use and occupancy, repair and maintenance, and insurance.
• Remedies available to the landlord and tenant.
• The effect of bankruptcy on leasing.
• Third-party guaranties of tenant performance.
• Subordination, attornment and non-disturbance agreements.
• Specific leasing transactions, such as shopping center leases, office leases, and store leases.
• Green leases.

Current Leasing is national in scope. It cites cases from across the county that the attorney can use to jumpstart his or her research.

Table of Contents

CHAPTER 1 INTRODUCTION

1.01 Scope and Organization of the Treatise

1.02 Format of the Treatise

1.03 General Drafting Guide-Checklist of Items to Consider in Drafting,
Assigning or Appraising Leases



CHAPTER 2 LEGAL FORMALITIES APPLICABLE TO LEASES

2.01 The Statute of Frauds

2.02 Recording Act Requirements

2.03 Some Considerations to Be Observed in the Recording of Leases



CHAPTER 3 RIGHTS AND OBLIGATIONS OF LANDLORD AND TENANT

3.01 Habitability of Premises

3.02 Retaliatory Eviction

3.03 Security Deposits

3.04 Unconscionable Leases

3.05 Exculpatory Clauses

3.06 Other State and Local Requirements Regarding Repairs and
Maintenance

3.07 Bibliography and Research Guide



CHAPTER 3A TAX CONSIDERATIONS IN REAL ESTATE LEASING

3A.01 Introduction

3A.02 Basic Tax Concepts

3A.03 General Income Tax Treatment of Lease Arrangements

3A.04 Treatment of Various Project Costs

3A.05 Depreciation Deduction

3A.06 Repair and Maintenance Versus Capital Improvements

3A.07 Rental Activity for Passive Activity Loss Purposes

3A.08 Classification of Income



CHAPTER 3B [RESERVED]



CHAPTER 3C AGREEMENTS WITH BROKERS, MANAGING AGENTS AND THIRD PARTIES

3C.01 Property Management Agreement Establishes Agency Between Owner and Managing Agent

3C.02 Property Management Agreements Define Relationship Between Owner and Managing Agent

3C.03 Checklist for Property Management Agreements

3C.04 Brokerage Agreements Establish Agency Between Real Estate Broker and Landlord or Tenant or Both

3C.05 Brokerage Agreements for Leasing Create Continuing Relationship
Between Owner and Broker

3C.06 Owner or Agent May Enter Into Third-Party Contracts
3C.07 Forms

3C.08 Bibliography and Research Guide



CHAPTER 3D REVIEWING A LEASE-TENANT’S PERSPECTIVE

3D.01 Factors Affecting Lease Negotiations

3D.02 The Tenant Has Legitimate Concerns Regarding the Landlord’s Title

3D.03 The Tenant Should Ensure that the Lease Is Signed by the Proper Person

3D.04 The Premises

3D.05 Defining the Tenant’s Rights and Obligations

3D.06 Length of the Lease Term

3D.07 Options to Renew, Options for Additional Space, Options to Purchase,
and Rights of First Refusal

3D.08 Landlord’s Option to Require the Tenant’s Relocation

3D.09 Rental Obligations

3D.l0 Tenant Inducements

3D.l1 Operating Expenses

3D.12 The Landlord’s Property Tax Obligations May Be Imposed on the
Tenant

3D.13 Late Charges and Interest Are Usually Charged on Late Rent

3D.14 The Tenant Usually Pays for Utilities and Services
3D.l5 The Tenant’s Use of the Premises Is Affected by the Lease and Local
Law

3D.l6 A Tenant’s Right to Alter the Premises Should Be Addressed in the
Lease

3D.l7 Obligations to Comply with Laws

3D.18 Repair and Maintenance

3D.19 Assignment and Subleasing

3D.20 Insurance

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3D.21 Indemnification and Liability Limitation (Exculpation)   Clauses

3D.22 Damage or Destruction of the Premises

3D.23 Condemnation

3D.24 Tenant Bankruptcy Clauses

3D.25 Tenant’s Default

3D.26 Self-Help Provisions May Benefit the Tenant in the Event of the
Landlord’s Default

3D.27 Clauses Addressing the Landlord’s Bankruptcy

3D.28 Lease Termination

3D.29 Security Deposits

3D.30 Sale of the Landlord’s Property

3D.31 Landlord’s Financing

3D.32 Anticipating the Tenant’s Future Financing Needs

3D.33 Tenant’s Rights as to Developing the Property: Landlord’s Easements,
Covenants, and Restrictions

3D.34 Guarantees

3D.35 Leases Frequently Require Tenant Estoppel Certificates

3D.36 The Lease Should Address the Landlord’s Rules and Regulations

3D.37 Recordation of the Lease May Be Opposed by the Landlord Due to Title
Issues

3D.38 Certain Lease Provisions May Be Covered by Boilerplate

3D.39 Landlord-Tenant Disputes May Be Resolved Through Arbitration

3D.40 A Lease Audit Provision Protects the Tenant



CHAPTER 4 BASIC LEASE PROVISIONS

4.01 Basic Lease Provisions

4.02 Term

4.03 Premises: Description and Condition

4.04 Brokerage Considerations

4.05 Sample Commercial Leases



CHAPTER 4A LEASE PROVISIONS FOR RENT AND ADDITIONAL RENT

4A.01 General Considerations in Commercial Lease Rent Provisions

4A.02 Types of Rent

4A.03 Minimum or Base Rent

4A.04 Step-Up Rent Provisions

4A.05 Escalation Clauses

4A.06 Operating Expenses and Other Charges

4A.07 Percentage Rent

4A.08 Lease Audits

4A.09 Statutes of Limitations

4A.10 Checklists for Drafting Rent and Additional Rent Provisions

4A. ll Sample Clauses

4A.12 Bibliography and Research Guide



CHAPTER 4B [RESERVED]


CHAPTER 4C LEASE OPTIONS TO RENEW, PURCHASE AND EXPAND

4C.01 Lease May Grant Lessee Option to Renew

4C.02 Options to Renew Drafting Checklist

4C.03 Lease May Grant Lessee Option to Purchase

4C.04 Options to Purchase Drafting Checklist

4C.05 Lease May Grant Lessee Option to Expand

4C.06 Options to Expand Drafting Checklist

4C.07 Option to Renew Sample Provisions and Forms

4C.08 Bibliography and Research Guide



CHAPTER 4D PROVISIONS CONCERNING DEFAULTS

4D.01 Lease Default Provisions

4D.02 Notice and Cure Period Provisions

4D.03 Materiality of the Lease Default Affects the Remedy

4D.04 Landlord Remedies

4D.05 Defaults Arising from the Landlord’s Failure to Deliver Possession

4D.06 Defaults Arising from a Failure to Repair or Maintain the Premises

4D.07 Defaults Arising from the Landlord’s Interference with Use of Premises

4D.08 Defaults Arising from the Tenant’s Failure to Use the Premises

4D.09 Defaults Arising from the Tenant’s Improper or Illegal Use of the
Premises

4D.10 Default Provisions and the Tenant’s Failure to Pay Rent

4D.l 1 Default Provision and the Landlord’s Duty to Mitigate

4D.l2 Force Majeure Provisions

4D.l3 Alternative Means of Dispute Resolution



CHAPTER 4E BOILERPLATE LEASE PROVISIONS

4E.01 Introduction

4E.02 Appropriateness of Boilerplate Provisions

4E.03 Nonstandard Boilerplate Provisions

4E.04 Standard Provisions



CHAPTER 5 ASSIGNMENT AND SUBLETTING; TRANSFER OF
LESSOR’S INTEREST

5.01 Lease Transfers

5.02 Distinguishing Between an Assignment and a Sublease

5.03 Lease Provisions Addressing Transfers

5.04 Profit Shifting Assignment Clauses

5.05 Application of Lease Transfer Restrictions

5.06 The Transfer of Percentage Leases

5.07 Statutes Regulating Assignments and Subletting

5.08 Transfer of the Lessor’s Interest

5.09 Model Lease Clauses and Forms of Sublease

5.10 Bibliography and Research Guide



CHAPTER 5A LEASE TAKEOVER AGREEMENTS

5A.01 Defined Terms

5A.02 The Lease Takeover Agreement as a Landlord Concession

SA.03 Early Termination or Buyout Under Takeover Lease

5A.04 Default Due to Vacation or Abandonment

5A.05 Assumption Versus Reimbursement

5A.06 Scope of Reimbursement Obligations

5A.07 Due Diligence Review

5A.08 Tenant’s Representations and Warranties

5A.09 Defining the Takeover Period

5A.l0 Method of Payment of Reimbursement Obligations

5A.11 Assignment and Subleasing Issues

SA.l2 Mutual Offset Rights

5A.13 Security for Landlord’s Obligations

5A.14 Form 5A: l-Lease Takeover Agreement



CHAPTER 5B ACQUIRING REAL ESTATE SUBJECT TO LEASES

5B.01 Basic Principles of Real Estate Investment Analysis

5B.02 Valuation Based on Present Worth of Property’s Future Benefits

5B.03 Analysis of Yearly Gross Income

5B.04 Analysis of Yearly Operating Expenses



CHAPTER 6 USE AND OCCUPANCY OF LEASED PREMISES

6.01 The Lessee’s Obligation to Use the Premises

6.02 Vacant or Deserted Premises

6.03 Lessor Imposed Restrictions on the Lessee’s Use and Occupancy of
the Premises

6.04 Residential Premises Used for Business Purposes

6.05 Use of Commercial Property for Residential Purposes

6.06 Illegality of Use

6.07 Use Restrictions Arising from Zoning Laws

6.08 Frustration of Purpose

6.09 The Effect of the Certificate of Occupancy on the Tenant’s Use of
the Premises

6.10 The Tenant’s Manner of Conducting Business

6.11 Implied Warranty of Suitability

6.12 Effect of Lessee’s Use on Insurance

6.13 Alterations

6.14 Covenants Against Competing Uses

6.15 Compliance with Law Provisions

6.16 Agricultural Leases

6.17 A Tenant’s Use of Light and Air

6.18 A Tenant’s Right to Use the Roof of the Leased Premises

6.19 A Tenant’s Right to Erect Signs on the Premises

6.20 Illustrative Clauses

6.21 Bibliography and Research Guide



CHAPTER 6A ENVIRONMENTAL LIABILITY

6A.01 Hazardous Substances and Emissions

6A.02 Federal Statutes Imposing Environmental Liability

6A.03 State Environmental Protection Statutes

6A.04 Environmental Protection Under the Common Law

6A.05 Liability

6A.06 Environmental Site Assessments

6A.07 Title and Property Insurance Considerations

6A.08 Valuation of Contaminated Properties

6A.09 Negotiating Environmental Provisions in a Lease

6A.10 Reference List of Federal Environmental Statutes

6A.11 Forms



CHAPTER 7 LANDLORD AND TENANT REMEDIES

7.01 An Overview of Landlord and Tenant Remedies

7.02 Statutory Provisions Governing Landlord-Tenant Remedies

7.03 Bibliography and Research Guide



CHAPTER 7A THE EFFECT OF BANKRUPTCY ON LEASING

7A.01 The Federal Bankruptcy Code Supersedes State Law

7A.02 The Bankruptcy Code’s Automatic Stay Is a Powerful Tool for the
Debtor

7A.03 Ipso Facto Clauses Are Unenforceable Under the Bankruptcy Code

7A.04 The Bankruptcy Code Allows Assumption or Rejection of
Unexpired Leases

7A.05 Treatment of Rent Due to the Landlord by a Debtor-Tenant

7A.06 Real Estate Taxes and Other Obligations Due Under a Lease

7A.07 The Trustee’s Assignment of a Lease

7A.08 Enforcement of Cross-Default Provisions

7A.09 Going Out of Business Sales Conducted at the Premises

7A.l0 Bankruptcy of the Landlord

7A.11 Forms: Illustrative “Bankruptcy“ Provisions for Commercial
Leases

7A.12 Forms: Illustrative Bankruptcy Litigation Forms Pertaining to
Assumption, Assignment or Rejection of Unexpired Nonresidential
Leases

7A.13 Bibliography and Research Guide



CHAPTER 7B THIRD-PARTY GUARANTIES OF TENANT

PERFORMANCE

7B.01 The General Nature of the Lease Guaranty

7B.02 Guaranty Distinguished from Suretyship

7B.03 Absolute Guaranties

7B.04 Conditional Guaranties

7B.05 Limited Guaranties

7B.06 Special Versus General Guaranties

7B.07 Continuing Guaranties

7B.08 Benefits of a Lease Guaranty Contract

7B.09 Judicial and Statutory Attitudes Toward Guaranties

7B.10 Notice of Acceptance of the Guaranty

7B.11 Consideration

7B.12 Identification of the Lease Being Guaranteed

7B.13 Duration of the Guaranty

7B.14 Holdover Tenants

7B.15 Renewals or Extensions of the Lease Term

7B.16 Assignments of the Lease

7B.17 Notices, Demand, and Waiver of Notice Regarding the Tenant’s
Default

7B.18 Modifications of the Original Lease

7B.19 Changes in the Lease Term

7B.20 The Effect of the Landlord’s Forbearance on a Guarantor’s
Liability

7B.21 Modification of the Rent Amount

7B.22 Reletting of the Premises to Mitigate the Landlord’s Damages

7B.23 Change in the Use of the Premises

7B.24 Unsigned Guaranties

7B.25 Effect of an Illegal or Unenforceable Lease

7B.26 Enforcement of a Guaranty

7B.27 Defenses Against Enforcement of a Guaranty

7B.28 Actions Against the Guarantor

7B.29 Corporate Authority, Corporate Officials and Guaranties

7B.30 Limitation of the Guarantor’s Liability by the Landlord’s
Termination of the Lease

7B.31 Surrender of the Leased Premises

7B.32 The Landlord’s Reentry of the Premises

7B.33 Joint and Several Guarantors

7B.34 Controlling Law

7B.35 Equitable Subrogation

7B.36 Co-Lessees Versus Guarantors

7B.37 Commercial Frustration

7B.38 Death of the Guarantor

7B.39 Judgments

7B.40 Attorney’s Fees

7B.41 Guaranty Insurance

7B.42 Letters of Credit as a Guaranty Tool

7B.43 Bankruptcy

7B.44 Commentary to the Forms

7B.45 Forms



CHAPTER 7C SUBORDINATION, ATTORNMENT & NONDISTURBANCE
AGREEMENTS

7C.01 Basic Concepts of Subordination, Attornment and Non-Disturbance

7C.02 Effect of Foreclosure on Leases Absent Subordination, Attornment,
or Non-Disturbance Provisions

7C.03 Use and Effect of Subordination, Attornment and Non-Disturbance
Agreements

7C.04 Subordination, Attornment and Non-Disturbance Provisions in
Leases Themselves

7C.05 Drafting and Negotiating Subordination, Attornment and Non-
Disturbance Agreements

7C.06 Drafting Checklist

7C.07 Sample Provisions and Forms

7C.08 Bibliography and Research Guide



CHAPTER 8 REPAIR AND MAINTENANCE OF PREMISES

8.01 Repairs Versus Maintenance

8.02 Landlord’s Obligation to Repair

8.03 Condition of the Premises and Liability for Injuries

8.04 Covenants Concerning New Structures

8.05 Conformity with Municipal Regulations, Insurance Laws and Tax
Laws

8.06 Sample Lease Provisions Concerning Maintenance and Repair
Obligations, Insurance Requirements and Damage and Destruction

8.07 Bibliography and Research Guide



CHAPTER 9 INSURANCE ASPECTS OF LEASES

9.01 Losses Arising Out of Liability Claims by Third Parties and
Liability Insurance Coverage

9.02 Losses to the Property of the Landlord and Tenant and Property
Insurance Coverage

9.03 Checklist for Indemnity, Waiver and Insurance Clauses

9.04 Illustrative Clauses in Leases for Indemnities, Waivers and
Insurance

9.05 Bibliography and Research Guide



CHAPTER 10 CONDEMNATION

10.01 Summary of the Law of Eminent Domain as Applied to Leasehold
Interests

10.02 Principles Governing Compensation Awards for a Tenant’s
Fixtures and Improvements

10.03 Buildings Erected by Lessees

10.04 Loss of Business, Profits and Good Will

10.05 Removal and Relocation Expenses

10.06 Drafting Considerations Pertaining to Condemnation Clauses in
Leases

10.07 Illustrative Condemnation Clauses for Inclusion in Various Types
of Leases

10.08 Checklist for Condemnation Clauses

10.09 Briefs and Record on Appeal in a Condemnation Case

10.10 The Role of the Appraisal in the Condemnation Process

10.11 Illustrative Condemnation Litigation Documents Regarding
Valuation

10.12 Bibliography and Research Guide



CHAPTER 11 SHOPPING CENTER LEASES

11.01 Developing a Shopping Center

1l.02 Condemnation-Eminent Domain

11.03 Radius Clauses

11.04 Exclusivity Rights

11.05 Implied Duty to Refrain from Destructive Competition

11.06 Use Clauses

11.07 Restrictive Lease Covenants and Recordation of Leases

11l.08 Parking

11.09 Brokers

11.10 Shopping Centers and First Amendment Issues

11.11 Federal and State Antitrust Issues

11.12 Merchants Associations

11.13 Utilities and Common Area Expenses

11.14 Demalling

11.15 Bankruptcy

11.16 Destruction of the Shopping Center

11.17 Shopping Center Leases: Drafting Guide-Checklist

11.18 Industry Groups

11.19 Forms

11.20 Bibliography and Research Guide



CHAPTER 12 THE SALE AND LEASEBACK OF REAL ESTATE

12.01 Types of Sale-Leaseback Transactions

12.02 Evaluation of a Sale-Leaseback as a Financing Vehicle

12.03 Tax Treatment of a Sale-Leaseback Transaction

12.04 Bankruptcy Treatment of a Sale-Leaseback Transaction

12.05 Forms for Use in a Sale-Leaseback Transaction




CHAPTER 13 GROUND LEASES

13.01 The Nature of Ground Leases

13.02 Ground Leases Utilized in Commercial and Residential
Transactions

13.03 Preliminary Matters to Consider Prior to Drafting Ground Lease

13.04 Negotiating and Drafting Ground Leases

13.05 Ground Lease Forms

13.05 Ground Lease Forms (Cont’d)



CHAPTER 13A LEASEHOLD FINANCING

13A.01 Introduction

13A.02 Regulatory Constraints on Leasehold Mortgage Financing

13A.03 Basic Principles of Leasehold Financing Credit Analysis and Appraisal

13A.04 Legal Aspects of Analyzing Leasehold Collateral

13A.05 Model Forms and Clauses for Leasehold Mortgage Financing Documents



CHAPTER 14 OFFICE LEASES

14.01 Drafting Office Leases

14.02 Drafting Checklist for Office Leases

14.03 Form 14:1-Office Lease with Alternative Provisions

14.04 Sample Rules and Regulations

14.05 Sample Landlord Workletter

14.06 Sample Landlord Cleaning Specifications

14.07 Additional Sample Lease Provisions

14.08 Bibliography and Research Guide



CHAPTER 14A STORE LEASES

14A.01 Drafting Store Leases Generally

14A.02 Store Leases: Drafting Guide Checklist

14A.03 Store Lease Forms

14A.04 Bibliography and Research Guide



CHAPTER 15 AIRSPACE

15.01 Airspace-Introduction

15.02 Transfer of Airspace Development Rights

15.03 Valuation of Airspace

15.04 Drafting Airspace Leases

15.05 Form 15:1-Lease of Space Over Railroad Terminal

15.06 Bibliography and Research Guide



CHAPTER 16 INDUSTRIAL LEASES

16.01 Areas of Special Concern in the Drafting of Industrial Leases

16.02 Form 16:1-Lease of an Industrial Building

16.03 Form 16:2-Standard Industrial/Commercial Single-Tenant Net
Lease

16.04 Ancillary Forms



CHAPTER 17 PROPRIETARY LEASES

17.01 Legal Analysis of Cooperative Apartment Projects and Proprietary
Leases

17.02 Representing the Purchaser of a Proprietary Lease

17.03 Limitations on Actions of the Cooperative Board of Directors

17.04 Checklists for the Sublessor and Sublessee of a Cooperative
Apartment

17.05 Contract and Closing Considerations

17.06 Forms: Standard Proprietary Lease Provisions

17.07 Forms: Acquisition and Transfer of a Cooperative Apartment

17.08 Bibliography and Research Guide



CHAPTER 17A COOPERATIVES AND CONDOMINIUMS BASED ON A
LEASEHOLD

17A.01 Factors Favoring a Leasehold Over Fee Approach

17A.02 State Cooperative and Condominium Law and Statutes Affecting
Leaseholds

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17A.03 Uniform Acts and Model Statutes Relating to Leasehold Projects

17A.04 Leasehold Condominiums and Leasehold Cooperatives Compared

17A.05 The Ground Lease and Ground Rent

17A.06 Financing a Leasehold Project

17A.07 Checklist for Leasehold Cooperatives and Leasehold
Condominiums

17A.08 Forms: Sample Offering Plan for a Marina-a Leasehold
Cooperative



CHAPTER 18 THE LEASING OF RESIDENTIAL, COMMERCIAL AND
INDUSTRIAL CONDOMINIUMS

18.01 Introduction

18.02 Uniform Acts Have Been Adopted to Control Condominiums

18.03 Other State and Federal Laws Are Applicable to Condominia

18.04 The Terminology Used in UCA and UCIOA Jurisdictions Is
Defined by Statute

18.05 State Statutes Control Condominium Use

18.06 Condominiums Are Controlled by Their Governing Documents and
an Owners’ Association

18.07 The Elements of Condominium Rent Include the Amount of the
Underlying Mortgage, Common Expense Assessment, and Real
Estate Tax Assessment

18.08 State Statutes Applicable to the Resolution of Disputes

18.09 State Statutes Applicable to Condominium Insurance

18.10 State Statutes Applicable to the Condominium’s Physical Plant

18.11 Commercial Condominiums Established as a Leasehold

18.12 State Eminent Domain and Termination Statutes Can Cause the
Condominium to Cease to Exist

18.13 Forms



CHAPTER 19 RESIDENTIAL LEASES

19.01 The Effect of September 11, 200l on Residential Leases

19.02 Unequal Bargaining Power of the Parties

19.03 Written vs. Oral Leases

19.04 Compliance with Statutory Enactments

19.05 Drafting Specific Residential Lease Clauses

19.06 Mobile Home and Mobile Home Park Space Leases

19.07 Compliance with Federal Law

19.08 Checklist for Residential Leases

19.09 Statutory References for Landlords’ and Tenants’ Remedies

19.10 Manufactured (Mobile) Home Park Space Forms



CHAPTER 20 GOVERNMENTAL LEASES

20.01 Federal Government Leases of Real Property

20.02 Small Business Administration Lease Guarantee Program

20.03 Real Property Leases with State and Local Governments-Checklist and
Sample Limiting Provisions

20.04 Form 20:1-Federal Government Lease Solicitation Forms and Lease for
Property Measuring Less than 10,000 Square Feet

20.05 Form 20:2-Lease of Truck Terminal by New York State Port Authority
With an Amendment Including an Option to Purchase Property

20.06 Form 20:3-Lease of Office Space in International Financial Center-
Government Lessor-Construction of Facility Not Yet Complete

20.07 Form 20:4-Municipal Ground Lease of Landmark Property to Developer



CHAPTER 21 GREEN LEASES

21.01 Green Lease Explained

21.02 Factors Driving the Development of Green Buildings

21.03 Levels of Green Leasing

21.04 Objectives of Green Leases; Addressing the “Split Incentive“

21.05 Third-party Certification Standards for Green Buildings

21.06 Green Leasing Guides

21.07 Common Provisions in Green Leases

21.08 Potential Legal Pitfalls in Green Leasing

21.09 Remedies for Breach of Green Provision

21.10 Green Lease Regulations and Third-Party Certification Programs

21.11 Case Studies of Green Leasing

21.12 Tips for Green Leasing

21.13 Drafting Checklist for a Green Lease


Index