§ 1.04 Commercial Lease Provisions

• Jurisdiction: United States
• Publication year: 2022

§ 1.04 Commercial Lease Provisions

[1]—In General

In addition to the basic lease provisions, such as identifying the parties, the term, the base rent, and a description of the premises to be demised, the lease will typically address a wide range of other issues, many of which are economic in nature. Most modern commercial leases will include additional rent provisions consisting of escalations, payments in lieu of taxes, tax payments and other monies for which the tenant will be responsible. In addition, as part of the consideration for the tenant to enter into the lease, tenant allowances and other inducements may be included.

The modern commercial lease document is a voluminous work. Many of its pages detail and define what constitutes additional or "hidden" rent payments and the parameters under which these additional rents will be passed through to the tenant. Another ten to fifty pages of a typical document will consist of tenant allowances, work letters, and construction specifications. These provisions determine the conditions and the monetary maximums under which a landlord will give such allowances, as well as the details regarding the materials and labor that will be provided to the tenant as part of the consideration for entering into the deal. These provisions may also outline in considerable detail the timing for submission of the tenant's plans and specifications for its interior construction and the turnaround required after obtaining a landlord's approval for completing the work.

Commercial leases also contain a considerable amount of boilerplate. Tenants tend to take these for granted, but their terms can impact the tenant in serious ways. There are changes that can be suggested to make these provisions less problematic, less broad. Reasonableness standards can be added. But, in no event, should provisions simply be glossed over.

Typical examples of boilerplate clauses include severability provisions¹ and modification clauses,² as well as notice, applicable law, prior agreement and binding effect provisions. Often leases contain a provision such as the following:

"Landlord, from time to time, has the right to make, establish and promulgate rules and regulations for the Building, and the occupants and tenants thereof, and Tenant shall observe, keep and comply with and cause its employees and invitees to observe, keep and comply with such rules and regulations."³

There is no notice requirement in this example. The landlord can make the changes without notifying the tenant and the tenant will be in default if he fails to comply with the changes. The clause above also does not mention that the lease will control if there is a rule or regulation that is contrary to the terms of the lease. These problems are addressed in the following provision:

"Landlord, from time to time, has the right to make, establish and promulgate in good faith reasonable and nondiscriminatory rules and regulations for the safety, care and cleanliness and preservation of good order in the Building and the occupants and tenants thereof, and Tenant shall observe, keep and comply with and cause

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