Chapter 3 - § 3.2 • CONSIDERATION

• Jurisdiction: Colorado

§ 3.2 • CONSIDERATION

A lease, like any agreement, requires adequate consideration.²⁶ Consideration can either be a benefit to the landlord or a detriment to the tenant.²⁷ Normally, the agreement to pay rent and the performance of the exchange of covenants provides the necessary consideration in a lease. If a landlord offers to lease premises rent free, however, the landlord may need to recite other consideration to make sure there is adequate consideration for the lease, such as the tenant's obligation to maintain the premises or to occupy them for safety and protection.

Consideration is a required element for a lease,²⁸ and, therefore, consideration is typically recited in a lease. It is customary to have words to the effect that, "Landlord enters into this Lease in consideration of the payment by Tenant of the rents reserved herein and the keeping, observance and performance by Tenant of the covenants and agreements of Tenant contained in this Lease."

Consideration is also an essential element in certain agreements related to leases. The amount and the sufficiency of consideration become very important when a lease is being terminated by agreement of the landlord and tenant, or when it is being amended to lower the rent or to reduce the length of the term.²⁹ In these situations, the parties should recite the consideration for the termination or amendment. If no consideration exists, the termination or amendment might be unenforceable. The extension of the time to satisfy a condition or perform an obligation, however, does not need additional consideration in order to be binding.³⁰ So, for example, extending the time for giving notice of an option to renew does not require additional consideration.³¹ An option to enter into a lease in the future should be supported by consideration, such as a payment for the option or, at a minimum, some action (such as due diligence investigations relating the premises or the property), or a change in position by the grantee (foregoing the search of alternative properties) to support the option. If the landlord grants a right to renew the lease or expand the premises when the lease is made, the lease is adequate consideration for those rights. If those rights are granted after the lease is made, separate consideration may be required. In most cases, the additional rent to be paid during the renewal term or for the expanded premises will serve as adequate consideration. A question as to the adequacy of consideration...