§ 1.06 Summary

• Jurisdiction: United States
• Publication year: 2022

§ 1.06 Summary

Leases have changed considerably since their origin as simple agricultural farming agreements in 16th-century England. Only a century later, general contract principles were applied. From that point until the present, the commercial lease has developed into a very sophisticated contract, emphasizing the structural and financial aspects of the transaction. Insofar as they involve complex financial arrangements, commercial leases require examination by lawyers, engineers, accountants, architects, financial analysts, developers and corporate business people.

The meaning and impact of all provisions in a commercial lease agreement, including, but not limited to, all dates, rental obligations, stated benefits, conditions, representations and warranties, must be thoroughly analyzed. It is equally important, however, to recognize the ramifications of matters upon which the lease is silent. In addition, the relation of the parties during the contract interval and after the creation of the landlord/tenant relationship must be understood. Because the modern commercial lease is a hybrid interaction between a demising and a contract, it is important to appreciate the distinctions in order to know what law to apply and what the rights and obligations of the parties are under each possible factual scenario.

Drafting a commercial lease is a challenging exercise. The document should fully embody the intentions of the parties to the transaction and must be examined meticulously to see whether or not it does so. In this regard, it is fundamentally important to deduce when the relationship between the parties begins, when the rights of occupancy and the obligations of payment originate, and what the common law limitations of leases are. The checklists of typical lease provisions and analysis points illustrate the complexity of the drafting and review process.¹

This chapter has introduced some fundamental elements of commercial leases, as well as some core issues that must be tackled in order to fully understand these complex documents. For instance, what is the operative date of the...