Real Estate Lease Preparation and Review

Real Estate Lease Preparation and Review

If you have land, a commercial building, or home that you want like to rent out to tenants, you need to protect your property and yourself with an air-tight lease. When dealing with real estate investments, having a legal professional on your side to help with lease preparation will make all the difference. Working with a real estate lease lawyer will save you plenty of frustration, money and time.

An attorney will help you cover all the key points when drafting a real estate lease. A real estate attorney is well-versed in state leasing regulations, fair housing and tenant rights. They will work with you to create a secure and thorough lease for your property.

Lease Review for Property Owners (Landlords) and Tenants

Real estate attorneys can also help with lease preparation when you’re renting a commercial space or home by reviewing the leasing paperwork. A real estate lawyer will review the relevant contract and point out any risks that you may not have noticed.

If you own property and have decided to lease, you’ll have to understand everything that is involved. Real estate attorneys, like Rozhik Law Firm PLLC, can help you understand your responsibilities and rights regarding leasing your property, whether commercial or residential. Contact us for lease preparation and review so we can help you with all your legal leasing requirements.

Commercial and Retail Lease Preparation and Review

A major part of Rozhik Law Firm’s commercial real estate practice has been commercial and retail leasing since the firms inception. In more than three decades since, our real estate attorneys in New York have handled just about any type of commercial and retail leasing issue and needs faced by managers, commercial property owners, tenants and brokers.

Our clients include tenants and landlords in the metropolitan area of Greater New York, in each of the five boroughs of Staten Island, Brooklyn, Manhattan, Queens and Bronx, as well as nationwide.

We represent a wide range of property owners, as well as tenants including big commercial tenants such as restaurants and movie theatres, smaller businesses operating out of shopping centers, enclosed malls and storefronts, retail operators in suburban and urban locations as well as distribution and manufacturing sites, and warehouses.

We understand that every client is unique and will tailor our counsel to provide the maximum value to our legal representation. Depending on your requirements, we will negotiate, draft and structure outparcel leases, in-line leases, anchor leases, triple net leases, ground leases, master leases and subleases, as well as lease amendments and other agreements pertaining to the retail leasing process.

Diverse Commercial and Retail Services

Our commercial and retail services are highly diverse, and includes:

• Restaurants: We have represented franchisees and franchisors, tenants and owners in restaurant leases and are familiar with the complex financial transactions that are often involved in those type of leases.
• Cinemas and movie theaters: Our clients include the biggest motion picture theater chain in the U.S. We have looked after the chain’s requirements in several states throughout the country.
• Leasebacks/Sales: A commonly used alternative to real estate financing is for property owners/operators to sell a property to investors, and then lease it back at preferential rates.
• Retail stores: From nationwide retail franchises to local boutiques, we negotiate, draft and review retail leases. We also have the ability to handle every stage in the development process of shopping centers, including drafting and reviewing major store and anchor leases.
• Franchises: Our experience as retail and commercial leasing attorneys enables us to advise our franchisee and franchisor clients on leases affecting their franchised business.

Leases and Rental Agreements

Agreement between tenants and landlords are called leases. A lease is a contract between a tenant and a landlord, and it contains important information about the property that is being rented. Once both the tenant and the landlord have signed a lease, it can’t be changed unless both parties agree to the change, the change is made in writing and signed by both parties. If an apartment is not rent-stabilized or rent-controlled, the lease doesn’t have to be in writing if it’s for less than a year. It is however always better to have a written agreement to avoid disputes and arguments.

A lease must be clear and must use words with everyday and common meaning. A lease’s print must be big enough to be easily read. A lease should at least cover the following:

• The lease’s length and when it ends
• The rent amount
• When rent is due
• Where to pay the rent
• How to pay the rent
• The amount of penalties if the rent check bounces
• What happens if the rent is paid late, including eviction and fees

New York State law covers specific issues relating to rent, including:

• How much time a tenant has to move out or pay their rent before the Landlord can file for eviction and/or non-payment of rent
• The amount of notice a Landlord must give to increase the rent under a month-to-month lease

Lease Provisions

If a lease has any of the provisions below, the court won’t enforce them against the tenant, and will consider them void:

• Declaring the landlord can evict the tenant without going to court
• Declaring the landlord isn’t responsible for injuries to property or persons caused by the landlord’s misconduct
• Declaring that the apartment is taken “as is” or that the tenant waives their rights under the Warranty of Habitability law
• Declaring that the tenant will give their household furniture as rent security

If a lease declares that a landlord can make the tenant pay attorney’s fees and costs for a lawsuit pertaining to the apartment or the lease, the tenant will have the same right automatically to make the landlord pay their attorney costs and fees if they win the lawsuit.

If there is not a lease, or the lease has expired, the tenant pays rent on a monthly basis. This is known as a “month-to-month tenancy.” A month-to-month tenancy can be terminated by either the tenant or the landlord giving at least one month’s notice before the end of the month. For month-to-month tenancies, the landlord doesn’t have to give a termination reason.

In New York City, the landlord must give the tenant notice with a 30 days’ written notice that they will have to vacate the premises before the end of the month. The notice must state that the landlord is terminating the tenancy and will start an eviction proceeding if the tenant does not vacate the premises by the date listed.

Lease Preparation and Review Checklist

As a lease is a contract, you need to understand what it means and how it will affect you.

You may also be able to negotiate changes to the lease, even if it comes on a form that’s preprinted. Preprinted forms should in fact be reviewed thoroughly, as its provisions will likely favor the landlord greatly.

It is a good idea to ask a landlord-tenant lawyer to review a lease agreement before you sign it. An experienced attorney will be able to help you with lease preparation by:

• Explaining how specific provisions work
• Pointing out provisions that are illegal
• Suggesting additional terms and changes
• Telling you if the provisions are unfavorable or favorable to you

The checklist below will help you review a lease properly before signing it:

• Does the lease use appropriate language?
• How long does the lease run? Although a year is typical, some landlords rent month-to-month, which gives both the landlord and the tenant better flexibility. A month-to-month lease is ideal if your job requires you to move a lot, if you study and move home when classes are not in session, or if you are living somewhere for a short time.
• Does the lease prevent you from using the property for a home business?
• Does the lease prohibit pets? If you have pets, discuss this with the landlord after they have agreed to rent to you, but before signing the lease. You may be able to get the landlord to agree to drop the provision.
• Does the lease have a limit on the number of people who may live in the property?

• What will happen if you don’t move out on time?

• Review the lease provisions related to its end date. How much notice do you have to give? If notice isn’t given on time, will the lease be extended for another term automatically?
• When is the rent due and will fees be charged for paying late? Is there time after the due date to pay your rent without triggering the fee?
• What happens if the lease is broken? The lease may say that if the lease is broken you will have to pay the landlord a specific amount automatically. This type of provision is known as a “liquidated damages clause.” It means that the landlord won’t have to prove the actual amount of monetary damage a breach would cause. These provisions tend to be unfair to the tenant and it is better not to get stuck with one.
• Does the lease permit you to assign your tenancy to somebody else or to sub-let the premises? It most likely won’t, but if it does, the clause will state the landlord must approve of any sub-tenant. Make sure the clause also states that approval won’t be withheld unreasonably.
• What are the requirements for a security deposit? If your state requires that a deposit must be returned with an itemized statement of deductions from the deposit and interest, the lease should reflect this.
• What are the landlord’s responsibilities to perform routine maintenance and make repairs?
• Who is responsible for paying utilities?
• Is there a clause that states the landlord will have a “lien” on your personal property if you damage the premises or if you don’t pay the rent? Be careful! A “lien” is the right to claim someone’s property if a stated condition, such as nonpayment, happens. A lien will give your landlord the right to take your property to pay your debt without them having to prove that they have suffered a monetary loss or that you have failed to pay. This means the landlord won’t have to go through an eviction proceeding. Although most courts will decide that an automatic lien provision can’t be enforced, it’s much easier if the clause is not in the lease.

Never rely on a landlord’s verbal promise not to enforce specific provisions. Get these changes in writing and have the landlord sign them. You can cross out language on the contract or write them in the margin. If changes have been made, ensure you have a copy with the changes and the landlord’s initials.

View the Property before Signing

After the landlord has agreed to rent to you, make sure that you and the landlord view the property together so that you both see its condition and what repairs may be needed. Compile a list of questionable items, sign or initial it with the date, and have the landlord do the same.

Provide a copy of the list to the landlord and keep one with your lease. This list may prove invaluable if there are disputes about your security deposit later.

Speak to an Attorney About Lease Preparation and Review before Signing

Real estate laws can be complex, especially if a lease contains provisions that use legal terms. To ensure your rights are protected, it may therefore be worthwhile to speak to an attorney that knows landlord-tenant law before signing a lease.