§18.1 - Introduction, Scope, and Definitions

• Jurisdiction: Washington

§18.1 INTRODUCTION, SCOPE, AND DEFINITIONS

This chapter is intended to provide a practical guide for use in reviewing and drafting commercial lease agreements.

(1) Introduction and Scope

This chapter discusses commercial lease agreements as well as ground leases. The substantive law issues that arise in a landlord-tenant relationship are addressed in Volume 2, Chapter 17 (Landlord and Tenant), of this deskbook. Although leasing property for agricultural use and renting residential real estate are "commercial" purposes, the commercial lease section of the chapter confines itself to the three categories of uses generally considered to be the focus of commercial leasing: office, retail, and industrial.

The issues presented in the commercial lease section are not intended to be exhaustive lists of every issue that might be addressed in a commercial lease. They are intended as a starting point for reviewing a lease on behalf of a client. A checklist of issues to address in commercial leases is provided as Form 18-4 on the CD accompanying this deskbook. Not every lease needs to, or will, address all the points raised on the checklist. Similarly, every transaction is different, and there will be transaction-specific issues that are not included on the checklist. It is essential to inquire of the client as to why topics are not addressed in the lease or if additional provisions are necessary to reflect the business transaction accurately.

The forms that are provided on the CD accompanying this deskbook are landlord-oriented, but they include comments, some of which relate to issues encountered when representing a tenant. Form 18-1 is a sample office space lease form that contemplates a multi-tenant building. Form 18-2 is a retail lease form that also contemplates a multi-tenant development, such as a shopping center. Form 18-3, the industrial lease form, is drafted contemplating a single tenant for an entire building. These lease forms all contemplate the lease of space within an existing structure. The forms are not appropriate for ground lease or complicated build-to-suit transactions.

A landlord leasing a small, single office or shop location could significantly reduce the complexity of these lease forms, although the basic outline of the lease form can be used. For example, the operating cost provision may be overly complicated for the lease of a single office in a small building; however, the issues set out in the clauses dealing with damage and destruction still need to be addressed.

Ground leases are addressed in §18.4, and a sample ground lease form is provided as Form 18-6 on the CD accompanying this deskbook.

As with all forms, there are certain caveats. Forms always should be nothing more than a starting point for drafting. Just because a provision is in a form does not mean that it is appropriate for the specific transaction at hand. There is never a substitute for the questions by the lawyer, "Does this provision need to be in the lease?" and "Does the lease accurately reflect my client's deal?"

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