Section 31 Checklist of Lease Provisions

• Library: Real Estate Leasing and Landlord-Tenant Actions and Remedies 2011

1. Parties

a. Individuals

(1) Is the spouse’s signature necessary?

(2) Correct spelling of names.

b. Corporations and other statutory entities

(1) Correct entity name.

(2) State of incorporation or organization.

(3) Are resolutions or consents necessary?

(4) If option to purchase, have resolutions or consents authorizing sale and conveyance.

c. Title—Power to Lease

(1) Who owns the fee?

(2) If a fiduciary is landlord, does the fiduciary have the power to lease the property, and can it lease the property for the full length of the proposed term?

d. Acknowledgment (required for recording)

2. Premises

a. Correctly described?

b. Correct dimensions, area, and location?

c. Exhibits correct?

d. Are areas approximately or substantially defined or are they fixed by exact locations and measurements?

e. Does landlord agree to furnish additional space in the future? If so, are landlord’s obligations defined exactly?

f. May landlord expand or reduce the size of the shopping center or development? Are the related rights of landlord and tenant set forth with sufficient particularity?

3. Term

a. Is length of term correct?

b. What date does term start? Are the commencement date provisions consistent with the rent clauses?

c. When must the tenant be permitted access to the premises for construction work or installation of fixtures?

d. Is tenant given free rent during installation of fixtures?

e. On what date can tenant cancel if landlord does not deliver the premises?

f. Can landlord cancel on failure to get financing, etc.? What is the last date landlord can cancel?

g. Date or time when tenant finally accepts the premises.

h. Is the commencement date of the lease (or the term) extended if the delivery of the premises to tenant is delayed?

i. Does tenant have rights to cancel?

j. If tenant holds over, is tenant a month-to-month tenant?

k. Is a separate instrument necessary to fix the beginning and end of term?

4. Options to extend lease, purchase premises, or terminate the lease

a. How many?

b. When must they be exercised?

1
                

c. Can the options be exercised if tenant is in default?

d. Do options (to extend or to purchase) terminate? When?

e. Does the lease contain a clause permitting tenant to cancel if the occupancy of the shopping center falls below a certain minimum of square feet or certain specified stores discontinue their operation?

f. If the rent is percentage rent in whole or in part, can landlord avoid the exercise of the option by tenant if tenant’s sales fall below a certain minimum?

5. Rent

a. Where is rent payable? Minimum rent correct?

b. Minimum rent starts when?

c. Minimum rent apportioned for fractional months at beginning or end of term?

d. Percentage rent correct?

e. Is minimum sales figure for percentage rent correct?

f. When does percentage rent start?

g. Is it apportioned at beginning or end of term?

h. Definition of “sales” proper?

i. Are the exclusions proper?

NOTE: Beware of deductions of taxes “measured by gross sales” or “gross sales taxes.” A city occupation, earnings, or income tax may be included.

j. Does percentage rent apply to all sales from leased premises or sales made by tenant?

k. Is landlord entitled to audit?

l. Does tenant agree to keep and retain its records? Where? How long?

m. Does tenant pay the cost of the audit if statements of net sales are in error?

n. When does tenant report sales?

o. When does tenant pay percentage rent?

p. Is the percentage rent adjustable at the end of the year?

q. Can landlord cancel the lease or prevent exercise of options to extend if percentage rent or sales fall below a certain figure?

r. Does tenant pay all or any part of taxes and fire insurance premiums? Can tenant contest tax or assessment increases? Does tenant pay taxes directly to taxing authority or to landlord? Must landlord pay taxes and then seek reimbursement or can landlord require tenant to pay landlord before landlord pays taxing authorities?

s. Is tenant required to keep its doors open?

6. Plans and specifications—work on premises

a. Does the exhibit containing plans and specifications for construction correctly and completely specify landlord’s and tenant’s work?

b. Does landlord...