Breaking Down Lease Agreements
Any agreement whereby a landlord transfers or conveys the right to use real property is a lease agreement. They can be long-term, for a month, a year, 99 years or longer. Sometimes they are accompanied by a deed which conveys property but also creates an obligation to pay rent. For instance, a lease is typically found with a long-term land grant. Lease agreements frequently govern the rights and obligations of landlords and tenants. It is important to remember that the tenant has the exclusive control over the property during the term of the lease agreement. On the other hand, a landlord may be responsible for making repairs or improvements to [the] property… If the landlord is not responsible for repairs or maintenance, the tenant normally is responsible . Failure on the part of the tenant to perform any obligations under the lease may constitute a default, which could allow the landlord to terminate the lease. Typically, leases have a starting and termination date and automatically terminate unless it contains a provision for an automatic renewal. If they do not, either party may decline to renew. In cases of renewal, the rent during the renewal period may be updated according to a specific formula. In absence of an agreement to the contrary, the rent adjustment formula will usually be based on a local index.
Seven Reasons to Find an Attorney
There are several key reasons why an attorney is helpful in the lease agreement process. First, when drafting a new lease or modifying an existing lease, your attorney will have a background in the law that allows for a solid understanding of the current situation and the necessary contingency plans to address any potential issues that could arise in the future.
Second, an attorney understands the local laws and ordinances that may apply in a rental situation. This way you can be confident that the terms of your lease agreement will be legally binding for all the parties involved. For example, there are many local laws surrounding the amount of notice a landlord must give a tenant before increasing rent, or the amount of support that a landlord is required to provide when commercial tenants are displaced, and an attorney can help you with this type of information.
Lastly, an attorney can be beneficial in the case of disputes. It is best to avoid any legal disputes with a tenant, but should there be an issue, an attorney will be able to help you understand the next steps that are specific to your situation. An attorney can also act as a third-party negotiator to help mitigate emotional situations.
Typical Lease Problems
Lease agreements are legal contracts, and as with any legal contract, they may contain ambiguities and potential areas for disagreement. When a dispute arises, the result may be a lawsuit and other unforeseen legal fees and costs. Therefore, it is important to examine potential issues that may impact your lease negotiations and to be aware of potential solutions that your legal lease attorney can help you negotiate into your lease agreement. To maintain your lease in good standing, you should make sure that you and your attorney have carefully reviewed the following lease terms before they are finalized.
Ambiguous Terms: Most likely, you have at least a few terms which are unique to your lease agreement. These terms, which are not included in your agreement with the landlord or vendor, may include the following: Disputes may arise if you and the landlord disagree over how these terms should be interpreted. It is to your benefit to make sure that the terms are specifically defined, and that you both understand the implications of each term. Your attorney can help you negotiate these terms with the landlord or vendor so that future misinterpretations are avoided.
Maintenance: The lease will define the specific steps that you and the landlord must take should there be a maintenance issue with the physical location of your leased space. For example, your lease may say that if the toilet leaks, the landlord is responsible for repairing it, or that if the power goes out, the landlord is responsible for investigating the issue. Any lease provision should consider and provide a plan for who will handle the situation and how, including: The specifics of the provision matter, but also consider what you would like the provision to say should the maintenance issue arise. Your attorney can help you negotiate a lease agreement that protects your interests in the event of a maintenance issue.
Termination: The lease agreement will define the appropriate steps that must be taken by both parties to terminate the agreement (i.e. how and how long in advance the tenant must give notice to vacate, and how the agreement may be renewed). Your termination notice requirements must include: Your attorney will help you create a plan that gives you enough wiggle room to make a change in the future (i.e. move to a new location, switch vendors) if needed.
Finding a Lease Agreement Attorney
When deciding on an attorney to handle your lease agreement, there are a few essential factors to keep in mind. Experience is one of the most important. You want to know that your attorney has handled plenty of real estate deals similar to your own. A knowledgeable attorney will have no problem answering your questions and clarifying concepts that may be unclear to you.
You should also consider whether your attorney specializes in real estate law. While many attorneys may be able to handle a lease agreement transaction, a specialized real estate attorney is likely to have a much greater level of knowledge, and therefore ability to assist you with your deal. Purchasing real estate is a major investment , and not something that you want to delegate to someone who does not specialize in the field. Regardless of the property type, a specialized real estate attorney can give you the best chance of having a successful experience.
The next thing to consider when hiring a lease attorney is client reviews. Prior client experiences are a good indication of what kind of services you can expect to receive as a new client. If possible, meet with the attorney or their team before hiring them to discuss the issues you may face and how they plan to handle them. You can also obtain previous client references to get another perspective on the process.
In some instances, you may have no choice on the lease agreement attorney you use. However, it is still important to know the qualifications of the attorney who will be handling your lease.
Costs of Retaining a Lawyer for Leases
The amount of time and money you spend on an attorney for your lease agreement will vary. You are unlikely to have an issue when three things occur: 1) the lease agreement is for a residential rental; 2) the apartment community has an on-site, full time property management staff member (not just a part time, on-call person); and 3) the lease is a form lease with only basic language (such as the address of the property, the amount of the rent, the length of the lease, and a list of rules and responsibilities of the landlord and the tenant).
If you do not have a pro-landlord form lease, you should be very involved in its drafting and legal review, because the lease agreement represents many important obligations from each party to each other.
If some or all of the above are not true for your lease agreement, the relationship to your landlord may be lengthy. For example, if the lease is for a commercial space (more time), there is no local on-site property management (more time), the proposed lease is heavily negotiated (more time) and the lease agreement is reviewed by outside counsel for the landlord and for you (more time), then the legal fees increase accordingly.
In a worst-case scenario, it is reasonable to expect that it could take more than 5 hours and $1,000 of legal fees to go through the above process for a single lease agreement.
On the other hand, ask if the fee might be lower for a less complicated assignment. Your attorney might know that your type of lease agreement is used for several clients, and therefore may be less time, effort and money to review for you.
Avoiding Problems with a Lease through an Attorney
Purchasing or leasing commercial real estate involves complicated negotiations, and multiple parties have their own distinct interests and priorities in the final contract. An attorney will ensure that both the landlord and tenant have a thorough understanding of the terms of the lease so that they are agreed upon and enforceable:
While landlords and tenants may be able to negotiate the basic terms of a lease, it can be difficult for either party to anticipate the future contingencies and actions of either party that can lead to a breach of the agreement. A qualified business attorney will take into account complex provisions such as rent abatement, late fees, and other financial penalties, personal and corporate guaranties , and damage caps. There are many situations that can cause serious disputes between owners and tenants. For example, it is possible for an innocent omission to easily be interpreted as an intentional breach of contract by one party or the other. Without a real estate lawyer, it is more likely that your rights and interests will not be well-protected.
Not only is it essential for the broad terms of the contract to be covered, but also any potential loopholes should be closed. Unfortunately, lease agreements are one of the most common agreements to make their way into litigation. In many cases, especially where a corporation is the tenant in question, it can be difficult to hold the individuals accountable when the agreement is violated.