Commercial Leases: Avoiding Costly Mistakes in Drafting Build-Out, - - PowerPoint PPT Presentation

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Commercial Leases: Avoiding Costly Mistakes in Drafting Build-Out, - - PowerPoint PPT Presentation

Presenting a live 90-minute webinar with interactive Q&A Commercial Leases: Avoiding Costly Mistakes in Drafting Build-Out, Repair, Casualty and Insurance Provisions THURS DAY, NOVEMBER 14, 2013 1pm East ern | 12pm Cent ral |


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SLIDE 1

Commercial Leases: Avoiding Costly Mistakes in Drafting Build-Out, Repair, Casualty and Insurance Provisions

Today’s faculty features:

1pm East ern | 12pm Cent ral | 11am Mount ain | 10am Pacific

The audio portion of the conference may be accessed via the telephone or by using your computer's

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have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.

THURS DAY, NOVEMBER 14, 2013

Presenting a live 90-minute webinar with interactive Q&A

Barry Katz, Partner, Arnstein & Lehr, Chicago Iryna Lomaga Carey, Partner, Kurzman Eisenberg Corbin & Lever, White Plains, N.Y .

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SLIDE 2

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SLIDE 3

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SLIDE 4

Program Materials

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SLIDE 5

COMMERCIAL LEASES: AVOIDING COSTLY MISTAKES IN DRAFTING BUILD-OUT, REPAIR, CASUALTY AND INSURANCE PROVISIONS

5

Iryna Lomaga Carey, Esq. Partner Kurzman Eisenberg Corbin & Lever, LLP One North Broadway, 10th Floor White Plains, NY 10601 icarey@kelaw.com Direct Dial: 914.286.6372 Barry R. Katz, Esq. Partner Arnstein & Lehr LLP 120 South Riverside Plaza, Suite 1200 Chicago, IL 60606-3910 brkatz@arnstein.com Direct Dial: 312.876.7847

Strafford CLE Webinar Thursday, November 14, 2013 1:00 pm – 2:30 pm (EST)

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SLIDE 6

THRESHOLD ISSUE: WHICH PARTY IS RESPONSIBLE FOR THE BUILD OUT?

  • Who is re spo nsib le , L

a ndlo rd o r T e na nt?

  • Do e s o the r pa rty ha ve a ppro va l o ve r hiring o f c o ntra c to r?
  • Wha t is the Co st o f Wo rk?
  • Ho w is it pa id?
  • Who o b ta ins pe rmits?

6

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SLIDE 7

PRE-COMMENCEMENT BUILD-OUT CONSIDERATIONS

T e na nt c o nside ra tio ns

  • T

iming fo r c o mple tio n

  • Wha t ha ppe ns if time line no t me t?
  • I

f L a ndlo rd pe rfo rms the Wo rk, do e s T e na nt ha ve a dro p de a d da te to te rmina te o r is pa yme nt o f re nt tie d to c o mple tio n da te o r b o th?

  • Co nditio n o f de live ry
  • Co st o f c o mple tio n
  • T

e na nt’ s ro le in c o nstruc tio n pro c e ss

  • Pla n re vie w pro c e ss
  • Pe na ltie s fo r la te de live ry

7

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SLIDE 8

PRE-COMMENCEMENT BUILD-OUT CONSIDERATIONS

L a ndlo rd c o nside ra tio ns

  • Bidding pro c e ss
  • De fining “sub sta ntia l c o mple tio n”
  • Co mplia nc e with la ws
  • Disruptio n o f o the r te na nts
  • Ove rtime
  • Co o rdina ting la ndlo rd’ s wo rk a nd te na nt’ s wo rk

8

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SLIDE 9

APPROVAL OF PLANS

  • Who pa ys fo r pla ns?
  • Bo th pa rtie s will ha ve input a nd rig hts o f a ppro va l
  • T

ime fra me fo r c o mme nts

  • T

he la rg e r the Pro je c t, the mo re like ly T e na nt will wa nt c o mpe titive b ids

9

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SLIDE 10

Change Orders

  • Ne g o tia te thre sho ld a mo unt
  • De ta il pro c e ss
  • Ho w muc h no tic e ?
  • Whe n is pa yme nt re q uire d fro m T

e na nt if c o st o f c ha ng e

  • rde r inc re a se s c o st o f c o nstruc tio n?

10

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SLIDE 11

Cooperation Of Parties

  • F
  • r la rg e r pro je c ts c o nside r re g ula rly sc he dule d pro je c t

me e ting s a nd pro g re ss re po rts

  • Co o rdina tio n o f L

a ndlo rd a nd T e na nt Wo rk

  • T

e na nt c a nno t inte rfe re with L a ndlo rd’ s c o ntra c to rs

  • Pa rtie s ne e d to wo rk in ha rmo ny
  • I

nsura nc e issue s

11

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SLIDE 12

Punch Lists

  • Ho w fa r in a dva nc e to re q uire ?
  • Who g e ts to pa rtic ipa te in c o mple tio n o f punc h list?
  • Wha t is c o nside re d sub sta ntia l c o mple tio n?
  • Ho w lo ng do e s L

a ndlo rd g e t to c o rre c t punc h list ite ms?

  • Ho w a re dispute s re so lve d?
  • Pa rtie s sho uld sig n the fina l punc h list

12

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SLIDE 13

Delivery Of Premises

  • Pre mise s to b e de live re d in g o o d c o nditio n
  • HVAC syste m, plumb ing , e le c tric a l, me c ha nic a l syste ms
  • De live ry in c o mplia nc e with b uilding c o de s a nd pla ns

13

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SLIDE 14

Representations And Warranties

  • Afte r c o mple tio n o f Wo rk, do e s L

a ndlo rd o r c o ntra c to r pro vide re pre se nta tio ns a nd wa rra ntie s?

  • Ro o f a nd struc ture
  • HVAC, plumb ing a nd a ll o the r syste ms
  • E

le c tric a l c a pa c ity

  • Ho w lo ng do wa rra ntie s a nd o c c upa nc y re pre se nta tio ns

survive ? (1-2 ye a rs)

  • L

a te nt de fe c t e xc lusio n

  • Ho w muc h time do e s T

e na nt ha ve to de live r no tic e o f a pro b le m to L a ndlo rd?

14

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SLIDE 15

15

SAMPLE CONSTRUCTION PROVISIONS

So m e b a sic c la u se s fo r d isc u ssio n … .

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SLIDE 16

LANDLORD’S WORK

  • L

a ndlo rd sha ll, a t L a ndlo rd’ s so le c o st a nd e xpe nse (e xc e pt a s o the rwise pro vide d he re in), furnish a ll o f the de sig n, ma te ria l, la b o r a nd e q uipme nt re q uire d to c o nstruc t the I mpro ve me nts1 in a c c o rda nc e with the Pla ns a nd Spe c ific a tio ns (the “Pla ns”) a s mo difie d b y a ny Cha ng e Orde r. L a ndlo rd sha ll c o nstruc t the I mpro ve me nts in a g o o d a nd wo rkma nlike ma nne r, a nd in a c c o rda nc e with a ll a pplic a ble sta tute s, o rdina nc e s a nd b uilding c o de s, g o ve rnme nta l rule s, re g ula tio ns a nd o rde rs re la ting to c o nstruc tio n o f the I mpro ve me nts (b ut no t ma tte rs a rising b e c a use o f T e na nt Wo rk o r spe c ific to the pa rtic ula r b usine ss T e na nt se e ks to e ng a g e in the Pre mise s). L a ndlo rd sha ll dilig e ntly pro c e e d with the c o nstruc tio n o f the I mpro ve me nts a nd use re a so na b le spe e d, dilig e nc e a nd g o o d fa ith e ffo rts to Sub sta ntia lly Co mple te the I mpro ve me nts to the Pre mise s o n o r prio r to the Pro je c te d Sub sta ntia l Co mple tio n Da te ; pro vide d, ho we ve r, if L a ndlo rd fa ils to so Sub sta ntia lly Co mple te the I mpro ve me nts a nd de live r po sse ssio n o f the Pre mise s o n o r prio r to the Pro je c te d Sub sta ntia l Co mple tio n Da te , the n (a ) the va lidity o f this L e a se a nd the o b lig a tio ns o f T e na nt unde r this L e a se sha ll no t b e a ffe c te d, a nd e xc e pt a s se t fo rth he re in, T e na nt sha ll ha ve no c la im a g a inst L a ndlo rd (a nd L a ndlo rd sha ll ha ve no lia b ility) he re unde r, a t la w o r in e q uity, a rising fro m L a ndlo rd’ s fa ilure to Sub sta ntia lly Co mple te the I mpro ve me nts a nd de live r po sse ssio n o f the Pre mise s b y suc h da te ; a nd (b ) sub je c t to the pro visio ns he re o f, the Co mme nc e me nt Da te sha ll b e po stpo ne d to the e xte nt o f suc h de la ys.

16

  • 1. Capitalize d te rms no t de fine d in the sample c lause s are de fine d e lse whe re in the do c ume nt fro m whic h the sample

c lause s have b e e n take n, and will ne e d to b e de fine d as appro priate fo r the de al at issue .

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SLIDE 17

PLANS AND SPECIFICATIONS; BIDDING

  • T

he fina l pla ns fo r the I mpro ve me nts sha ll b e sub je c t to the a ppro va l o f b o th L a ndlo rd a nd T e na nt. T he I mpro ve me nts to b e e ffe c te d pursua nt to the Pla ns a nd Spe c ific a tio ns a re so me time s re fe rre d to he re in a s the “Wo rk.”

  • T

he pa rtie s a g re e tha t the c o st o f the Wo rk will b e $_____ (“T

  • ta l Co sts”)

sub je c t to Cha ng e Orde rs a ppro ve d b y b o th pa rtie s. T he T

  • ta l Co sts

inc lude the sum o f $______ to ______________, $_____ fo r a n _____________a nd $_____ fo r _________. L a ndlo rd a nd T e na nt a g re e tha t the g e ne ra l c o ntra c to r fo r the I mpro ve me nts sha ll b e ________ Co nstruc tio n Co mpa ny.

  • L

a ndlo rd sha ll so lic it c o mpe titive b ids fro m a t le a st thre e (3) sub c o ntra c to rs fo r e a c h ma jo r tra de re q uire d to c o mple te the Wo rk. E a c h suc h b idde r sha ll b e q ua lifie d to do its po rtio n o f the Wo rk. Ne ithe r L a ndlo rd no r the g e ne ra l c o ntra c to r sha ll ha ve a dire c t o r indire c t o wne rship inte re st

  • r fa milia l re la tio nship with a ny

b idding sub c o ntra c to r e xc e pt a s disc lo se d in writing to T e na nt, in whic h e ve nt suc h b id sha ll b e sub je c t to the writte n c o nse nt o f T e na nt.

  • T

e na nt sha ll ha ve the rig ht to o ffe r c o mme nts to the L a ndlo rd re g a rding the se le c tio n o f b idde rs a nd re q uire L a ndlo rd to inc lude c e rta in b idde rs, pro vide d suc h b idde rs me e t L a ndlo rd’ s re a so na b le a ppro va l, inc luding witho ut limita tio n, a ll insura nc e re q uire me nts.

17

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SLIDE 18

COSTS AND CHANGE ORDERS

  • L

a ndlo rd will no t c ha rg e a supe rviso ry, c o nstruc tio n ma na g e me nt o r o the r fe e with re spe c t to the Wo rk o r I mpro ve me nts, o r o the rwise b e re imb urse d o r pa id fo r c o sts o f e xpe nse s inc urre d in c o nne c tio n with the Wo rk o r I mpro ve me nts, pro vide d ho we ve r, a fe e e q ua l to _____ pe rc e nt (__%) o f the Wo rk, sha ll b e pa id to ______________, whic h fe e sha ll b e inc lude d in the T

  • ta l Co sts.
  • I

f the fina l c o st o f the Wo rk is le ss tha n the T

  • ta l Co sts, the diffe re nc e

b e twe e n the fina l c o st o f the Wo rk a nd the T

  • ta l Co sts will b e c re dite d

a g a inst Ba se Re nt due fro m T e na nt a fte r e xpira tio n o f the Ba se Re nt Ab a te me nt Pe rio d.

  • T

he Pla ns a nd Spe c ific a tio ns sha ll no t b e c ha ng e d b y L a ndlo rd witho ut the prio r writte n a ppro va l o f the T e na nt. T e na nt sha ll pro mptly re c e ive a c o py o f e a c h c ha ng e o rde r a nd a n e xpla na tio n in re a so na b le de ta il fo r e a c h c ha ng e . T e na nt sha ll ha ve the rig ht to re q ue st in writing tha t L a ndlo rd ma ke c ha ng e s fro m time to time in the Wo rk. Upo n suc h re q ue st b y T e na nt, L a ndlo rd sha ll e xpe ditio usly pre pa re a de ta ile d c ha ng e o rde r with pla ns a nd c o sts fo r suc h c ha ng e a nd whic h sha ll se t fo rth (i) a ny inc re a se o r de c re a se in the T

  • ta l Co sts, a nd (ii) a ny e xte nsio n o r

sho rte ning o f the c o mple tio n da te o f the Wo rk (a nd the c o rre spo nding da te s in this L e a se ), a nd re c e ive T e na nt's writte n a ppro va l o f suc h c ha ng e o rde r prio r to the c o mme nc e me nt o f the Wo rk tha t is the sub je c t the re o f.

18

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SLIDE 19

PERMITS, APPROVALS AND COMPLIANCE WITH LAWS

  • L

a ndlo rd sha ll a pply fo r a nd o b ta in, a ll pe rmits, lic e nse s a nd c e rtific a te s (inc luding zo ning a ppro va ls) ne c e ssa ry fo r the c o nstruc tio n o f the Wo rk a nd fo r the o c c upa nc y the re o f b y T e na nt. T he fe e s fo r a pplying fo r, a nd the issua nc e a nd e xpe diting o f suc h pe rmits, lic e nse s a nd c e rtific a te s sha ll b e inc lude d in the T

  • ta l Co sts. L

a ndlo rd sha ll b e o b lig a te d to o b ta in a pe rma ne nt c e rtific a te o f

  • c c upa nc y re g a rdle ss o f whe the r a

te mpo ra ry c e rtific a te sha ll ha ve first b e e n issue d.

  • L

a ndlo rd c o ve na nts, re pre se nts a nd wa rra nts tha t: (i) the I mpro ve me nts sha ll, upo n the Co mme nc e me nt Da te , b e in c o mplia nc e with a ll L a ws; (ii) no Ha za rdo us Sub sta nc e s, a s se t fo rth in Se c tio n ___ he re o f, sha ll b e inc o rpo ra te d into the Pre mise s b y o r o n b e ha lf o f L a ndlo rd; a nd (iii) utilitie s a nd dra ina g e struc ture s e xte nde d to o r o n the site sha ll b e pro pe rly size d fo r the use o f the Pre mise s fo r the Pe rmitte d Use .

  • No te : c o nside r a ny o the r fa c to rs

re le va nt to the de sig n a nd use o f the Pre mise s b y T e na nt.

19

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SLIDE 20

TENANT ACCESS DURING CONSTRUCTION

  • During c o nstruc tio n o f the Wo rk, T

e na nt a nd its re pre se nta tive s sha ll a t time s ha ve a c c e ss to the Wo rk fo r the purpo se o f ma king inspe c tio ns o f the Wo rk in pro g re ss. No thing he re in c o nta ine d sha ll b e c o nstrue d a s c re a ting a n o b lig a tio n upo n T e na nt to ma ke suc h inspe c tio ns, a nd it is L a ndlo rd's o b lig a tio n to insure tha t Wo rk is c o mple te d in c o mplia nc e with the Pla ns a nd Spe c ific a tio ns. I f during c o nstruc tio n, T e na nt re a so na b ly de te rmine s tha t c o nstruc tio n is no t pro c e e ding in a c c o rda nc e with the Pla ns a nd Spe c ific a tio ns, T e na nt sha ll g ive no tic e to L a ndlo rd spe c ifying the pa rtic ula r de via tio n, de fic ie nc y o r

  • missio n a nd L

a ndlo rd sha ll pro mptly ta ke suc h ste ps a s sha ll b e ne c e ssa ry to c o rre c t suc h de via tio n, de fic ie nc y o r o missio n. T e na nt a nd T e na nt's re pre se nta tive sha ll b e g ive n re a so na b le no tic e o f a nd ma y a tte nd a ll pro je c t me e ting s, inc luding a ll de sig n re vie w me e ting s a nd c o nstruc tio n me e ting s. L a ndlo rd sha ll me e t with T e na nt mo nthly (o r mo re fre q ue ntly if re a so na b ly re q uire d b y T e na nt) to pro vide de ta ile d pro g re ss re po rts a nd to pe rmit T e na nt re vie w Wo rk in pro g re ss.

20

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SLIDE 21

CONSTRUCTION DELAYS

  • I

n the e ve nt tha t c o nstruc tio n o f the Wo rk is mo re tha n thirty (30) da ys de la ye d b e hind the Pro je c t Sc he dule , a tta c he d he re to a s pa rt o f E xhib it __ fo r re a so n o the r tha n a n e ve nt o f fo rc e ma je ure , L a ndlo rd sha ll pro mptly unde rta ke , a t its so le c o st a nd e xpe nse , a ppro pria te a c tio ns to b ring c o nstruc tio n b a c k o n sc he dule . During a ny suc h de la y, L a ndlo rd sha ll pro vide T e na nt with a we e kly re po rt tha t ide ntifie s the c a use o f suc h de la y a nd the a c tio ns b e ing ta ke n to c ure the de la y.

  • No te : L

a ndlo rd’ s o fte n se e k to c a rve -

  • ut T

e na nt de la ys, pa rtic ula rly in the pla n re vie w pro c e ss.

  • F
  • r purpo se s o f this Artic le ___ o nly,

T e na nt ha s a ppo inte d ________________ to a ssist a nd c o nsult with L a ndlo rd c o nc e rning the Wo rk. T e na nt’ s re pre se nta tive ma y no t b ind T e na nt. T e na nt sha ll ha ve the rig ht to a ppo int o r re pla c e a suc c e sso r re pre se nta tive a t a ny time upo n writte n no tic e to L a ndlo rd.

21

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SLIDE 22

TENANT’S ACCESS TO PERFORM WORK

  • F

ro m a nd a fte r the E a rly Ac c e ss Da te , L a ndlo rd sha ll pro vide T e na nt with a c c e ss to the Pre mise s fo r purpo se s o f pe rfo rming the T e na nt Wo rk. No twithsta nding the fo re g o ing , T e na nt sha ll no t b e e ntitle d to use a nd/ o r o c c upy the Pre mise s o the r tha n fo r the pe rfo rma nc e o f the T e na nt Wo rk until the Co mme nc e me nt Da te ha s o c c urre d. T e na nt sha ll pe rfo rm a ny T e na nt Wo rk in the Pre mise s in a c c o rda nc e with, a nd sub je c t to the limita tio ns c o nta ine d in this Se c tio n ___.

  • Prio r to c o mme nc ing a ny T

e na nt Wo rk, T e na nt sha ll pro vide L a ndlo rd with: (i) c o pie s o f a ll pla ns a nd spe c ific a tio ns pe rta ining to the T e na nt Wo rk fo r whic h suc h a c c e ss is b e ing re q ue ste d; (ii) c o pie s o f a ll lic e nse s a nd pe rmits re q uire d in c o nne c tio n with the pe rfo rma nc e o f the wo rk fo r whic h suc h a c c e ss is b e ing re q ue ste d; a nd (iii) c e rtific a te s o f insura nc e na ming L a ndlo rd a s a dditio na l insure d/ lo ss pa ye e a s re a so na b ly a pplic a b le .

  • Suc h e ntry into the Pre mise s sha ll a lso b e sub je c t to the re q uire me nts tha t (1) prio r to

T e na nt o r a ny o f the T e na nt Pa rtie s (a s he re ina fte r de fine d) o b ta ining a c c e ss o r e ntry to the Pre mise s, T e na nt must first sa tisfy the Ac c e ss Co nditio ns, a nd (2) T e na nt a nd a ll T e na nt Pa rtie s sha ll wo rk in ha rmo ny a nd no t inte rfe re with L a ndlo rd a nd its a g e nts a nd c o ntra c to rs in do ing L a ndlo rd’ s wo rk in, to , o r o n the Impro ve me nts. If a t a ny time suc h e ntry o r o c c upa nc y sha ll c a use o r c re a te a n immine nt like liho o d o f disha rmo ny o r inte rfe re nc e , L a ndlo rd, in L a ndlo rd’ s re a so na b le disc re tio n, sha ll ha ve the rig ht to suspe nd suc h a c c e ss upo n twe nty-fo ur (24) ho urs’ writte n no tic e to T e na nt until suc h time a s T e na nt, a t T e na nt’ s so le c o st, ha s re me die d the c a use s o f suc h disha rmo ny o r inte rfe re nc e . T e na nt a g re e s tha t a ny suc h e ntry into a nd o c c upa nc y o f the Pre mise s sha ll b e de e me d to b e ma de unde r a ll o f the te rms, c o ve na nts, c o nditio ns a nd pro visio ns o f the L e a se , e xc e pt a s to the c o ve na nt to pa y Re nt. 22

slide-23
SLIDE 23

DELIVERY OF POSSESSION NOTICE AND PUNCH LIST

  • L

a ndlo rd sha ll no tify T e na nt a ppro xima te ly ______ (___) da ys prio r to the da te o n whic h L a ndlo rd e stima te s tha t the I mpro ve me nts will b e Sub sta ntia lly Co mple te d. Within ____ (__) da ys o f re c e ipt o f suc h no tic e , L a ndlo rd a nd T e na nt sha ll to g e the r wa lk thro ug h the Pre mise s a nd inspe c t a ll I mpro ve me nts, using re a so na b le e ffo rts to disc o ve r a ll unc o mple te d o r de fe c tive c o nstruc tio n in the I mpro ve me nts. Afte r suc h inspe c tio n ha s b e e n c o mple te d, e a c h pa rty sha ll sig n a n a c c e pta nc e a g re e me nt in a re a so na b ly a g re e d upo n fo rm (the “Ac c e pta nc e Ag re e me nt”), whic h sha ll inc lude , b y a tta c hme nt, a list o f a ll “punc h list” ite ms whic h the pa rtie s a g re e a re to b e c o rre c te d b y L a ndlo rd in c o nne c tio n with the Pre mise s.

  • L

a ndlo rd sha ll use re a so na b le e ffo rts to c o mple te a nd/ o r re pa ir suc h “punc h list” ite ms within ____ (___) da ys a fte r e xe c uting the a pplic a b le Ac c e pta nc e Ag re e me nt. ____ (__) da ys prio r to the pro je c te d Sub sta ntia l Co mple tio n Da te , L a ndlo rd a nd T e na nt a g a in sha ll wa lk thro ug h the Pre mise s a nd de te rmine a ll Punc h L ist ite ms fro m the Ac c e pta nc e Ag re e me nt tha t re ma in unc o rre c te d. T e na nt’ s c o mme nc e me nt o f b usine ss o pe ra tio ns fro m a nd in a ny pa rt o f the Pre mise s sha ll b e de e me d to b e a n a c c e pta nc e b y T e na nt o f the I mpro ve me nts, e xc e pt fo r the a g re e d upo n punc h list ite ms.

23

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SLIDE 24

LATE COMMENCEMENT OR LATE COMPLETION

  • Sub je c t o nly to fo rc e ma je ure a nd T

e na nt De la ys, if L a ndlo rd sha ll fa il to a c hie ve Sub sta ntia l Co mple tio n o n o r b e fo re ______, the n T e na nt sha ll re c e ive , a s o f the Re nt Co mme nc e me nt Da te o ne (1) a dditio na l da y o f a b a te me nt o f Ba se Re nt fo r e a c h da y o f suc h de la y fo r the initia l thirty (30) da ys o f de la y a nd two (2) da ys o f Ba se Re nt fo r e a c h da y o f de la y b e yo nd the thirtie th (30th) da y o f de la y. I n the e ve nt c o nstruc tio n o f the I mpro ve me nts ha s no t c o mme nc e d b y ______, with the L a ndlo rd’ s inte ntio n to pro c e e d dilig e ntly to c o mple te the sa me b y ______, T e na nt ma y te rmina te this L e a se upo n writte n no tic e to L a ndlo rd. I n the e ve nt L a ndlo rd sha ll fa il to a c hie ve Sub sta ntia l Co mple tio n o n o r b e fo re _________, T e na nt, a t its so le o ptio n, ma y te rmina te this L e a se upo n _______ (__) da ys’ no tic e to L a ndlo rd. Upo n re c e ipt o f e ithe r suc h te rmina tio n no tic e , L a ndlo rd sha ll re fund to T e na nt a ny sums pa id b y T e na nt he re unde r to L a ndlo rd, the g e ne ra l c o ntra c to r, the a rc hite c t o r a ny o the r pe rso n o r e ntity, whe re upo n the pa rtie s sha ll ha ve no furthe r o b lig a tio ns he re unde r.

  • Co nside r the fo llo wing pro viso : “pro vide d, ho we ve r, if Sub stantial Co mple tio n o c c urs

prio r to the date se t fo rth in T e nant’ s no tic e , the n te nant’ s no tic e shall b e de e me d null and vo id and o f no fo rc e and e ffe c t and this L e ase shall re main in full fo rc e and e ffe c t.

24

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SLIDE 25

DELIVERY OF POSSESSION

  • L

a ndlo rd a g re e s tha t it sha ll de live r the Pre mise s to T e na nt o n the Co mme nc e me nt Da te with (i) the he a ting , ve ntila tio n a nd a ir c o nditio ning syste ms (“HVAC Syste ms”), plumb ing , e le c tric a l, lo a ding do o rs a nd a ll o the r Building Syste ms in g o o d wo rking o rde r, c o nditio n a nd re pa ir, a nd (ii) the ro o f a nd struc ture o f the ________ in g o o d c o nditio n a nd re pa ir, e xc e pt fo r a ny de fic ie nc ie s a s a re sult o f the ne g lig e nc e o r misc o nduc t o f T e na nt o r a ny T e na nt Pa rtie s o r the misuse o f the Pre mise s o r the Pro pe rty b y T e na nt o r the T e na nt Pa rtie s.

  • L

a ndlo rd re pre se nts tha t the e le c tric a l c a pa c ity o f the Building a fte r c o mple tio n o f the I mpro ve me nts sha ll b e suffic ie nt fo r the Pe rmitte d Use .

  • L

a ndlo rd sha ll no t b e o b lig a te d to ma ke a ny re pa irs, re pla c e me nts o r impro ve me nts (whe the r struc tura l o r o the rwise ) o f a ny kind o r na ture to the fo re g o ing in c o nne c tio n with, o r in c o nside ra tio n o f, this L e a se , e xc e pt (a ) a s se t fo rth he re in a nd (b ) with re spe c t to the I mpro ve me nts.

25

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SLIDE 26

WARRANTIES

  • F
  • r a pe rio d o f two (2) ye a rs fro m Sub sta ntia l Co mple tio n, the I

mpro ve me nts sha ll b e wa rra nte d b y L a ndlo rd a g a inst de fe c ts in de sig n, ma te ria ls a nd wo rkma nship. Witho ut limiting L a ndlo rd’ s re pa ir o b lig a tio ns to the e xte nt e xpre ssly se t fo rth in the L e a se , L a ndlo rd sha ll, a t L a ndlo rd’ s e xpe nse , pro mptly re pa ir o r re pla c e a ny suc h de fe c tive Wo rk e vide nc e d b y writte n no tic e fro m T e na nt to L a ndlo rd within suc h two (2) ye a r pe rio d, e xc e pt to the e xte nt tha t a ny suc h de fe c ts a re a ttrib uta b le to the misuse o r ne g le c t o f T e na nt o r its a g e nts, e mplo ye e s o r c o ntra c to rs.

  • During the e ntire L

e a se T e rm, L a ndlo rd wa rra nts the I mpro ve me nts a g a inst a ll la te nt de fe c ts a nd the fa ilure o f the I mpro ve me nts to b e c o mple te d in a c c o rda nc e with the Pla ns a nd Spe c ific a tio ns. T he wa rra ntie s se t fo rth a b o ve in this Se c tio n ___ c o ve r a ll de sig n, la b o r, ma te ria ls a nd e q uipme nt re q uire d to pe rfo rm a ny re q uire d re pa irs o r

  • the r re me dia tio n re sulting fro m the b re a c h o f a ny suc h wa rra nty. Upo n a nd fo llo wing

Sub sta ntia l Co mple tio n, L a ndlo rd sha ll e nfo rc e fo r the b e ne fit o f T e na nt a ll suc h wa rra ntie s a nd g ua ra nte e s re la ting to the Wo rk a nd a ll e q uipme nt a nd b uilding syste ms c o mprising a po rtio n o f the Wo rk. L a ndlo rd's fa ilure to ho no r a ny suc h wa rra nty ma de b y L a ndlo rd sha ll b e a De fa ult b y L a ndlo rd sub je c t to L a ndlo rd's a nd T e na nt's rig ht to c ure pro vide d in this L e a se . [No te : this will re q uire ne g o tia tio n o f a se lf- he lp pro visio n fo r T e na nt]

26

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SLIDE 27

COOPERATION OF THE PARTIES

  • T

he pa rtie s a g re e to use c o mme rc ia lly re a so na b le e ffo rts a nd sha ll c o o pe ra te in g o o d fa ith with e a c h o the r so tha t the va rio us ta sks a nd o b lig a tio ns o f the pa rtie s re fle c te d in the Pro je c t Sc he dule o r pro vide d fo r in this Artic le __ ma y b e pe rfo rme d a nd c o mple te d within the time pe rio ds pro vide d in the Pro je c t Sc he dule o r this Artic le __ inc luding , b ut no t limite d to , re spo nding within re a so na b le time pe rio ds to re q ue sts o f the o the r pa rty ta king into a c c o unt the da te s se t fo rth in the Pro je c t Sc he dule to whic h suc h re q ue sts re la te .

27

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SLIDE 28

REPAIR AND REPLACEMENT

Ge ne ra l Princ iple s

  • T

he lo ng e r the le a se , the mo re the “b urde n” o f re pa ir shifts to T e na nt

  • Mo st le a se s a re no t true “triple ne t le a se s” whe re T

e na nt is re spo nsib le fo r a ll ma inte na nc e a nd re pa ir

  • Mo st le a se s divide the re spo nsib ility fo r spe c ific re pa ir ite ms
  • ne wa y o r the o the r

28

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SLIDE 29

Typical Division of Responsibility in an Industrial Lease

  • L

a ndlo rd: Ro o f, HVAC, e le c tric a l a nd plumb ing syste ms, struc ture o f the ________, e xte rio r wa lls

  • T

e na nt: I nte rio r no n-struc tura l c o mpo ne nts, lig ht fixture s, inte rio r plumb ing , HVAC syste m, e le c tric a l a nd me c ha nic a l syste m se rving the Pre mise s, e xte rmina tio n

29

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SLIDE 30

HVAC Systems

  • Ofte n a ne g o tia te d pro visio n
  • I

n sho rt te rm le a se , T e na nt sho uld try to pla c e re spo nsib ility fo r re pa ir a nd re pla c e me nt o n L a ndlo rd

  • Ofte n, a hyb rid pro visio n is L

a ndlo rd is re spo nsib le fo r ma jo r re pa ir a nd ma inte na nc e o f HVAC; T e na nt fo r o rdina ry ma inte na nc e a nd re pa ir

  • So lutio n a s to T

e na nt’ s o b lig a tio n o f o rdina ry re pa ir a nd ma inte na nc e is purc ha se o f a HVAC ma inte na nc e c o ntra c t

30

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SLIDE 31

Watch-Out Provisions

  • Re pa irs re q uire d b y la w o r b y g o ve rnme nta l a utho rity –

fo c us o n wha t is me a nt. L a ndlo rd pro visio ns a re b ro a dly dra fte d a nd impo se e xpe nsive re pa irs upo n T e na nt

  • Sprinkle r syste ms (a re a whe re la ws o fte n c ha ng e )
  • Pa rking lo t – if yo u ha ve a te rm o f 5 ye a rs o r le ss, a ddre ss

whe the r T e na nt is re spo nsib le fo r, re pa ving , re -striping , re pa iring o f c urb s a nd/ o r re pla c e me nt o f pa rking a re a (s). Ac tua l life o f pa rking lo t a re a is 7 ye a rs

  • Se we r line b e twe e n Pre mise s a nd stre e t: c a n b e b ig issue o r

pro b le m: mo st le a se s a re sile nt. (Big g e r issue in sing le -use b uilding s.)

31

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SLIDE 32

32

SAMPLE MAINTENANCE AND REPAIR PROVISIONS

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SLIDE 33

TENANT’S OBLIGATIONS

  • T

e na nt sha ll ma inta in the Pre mise s in g o o d, c le a n a nd sa nita ry o rde r a nd c o nditio n, inc luding witho ut limiting the g e ne ra lity o f the fo re g o ing , a ll plumb ing , he a ting , a ir c o nditio ning , ve ntila ting , e le c tric a l, lig hting fa c ilitie s a nd e q uipme nt within the Pre mise s, fixture s, inte rio r wa lls, c e iling s, de c king , flo o rs, windo ws, do o rs, pla te g la ss a nd skylig hts lo c a te d within the Pre mise s, a nd sig ns (e xc e pt L a ndlo rd’ s sig ns, if a ny) lo c a te d o n the Pre mise s. T e na nt sha ll b e re spo nsib le fo r sno w re mo va l, a nd T e na nt sha ll e nte r into a pre ve nta tive ma inte na nc e c o ntra c t fo r the HVAC Syste ms o n te rms a nd with a pro vide r re a so na b ly a c c e pta b le to L a ndlo rd, whic h c o ntra c t sha ll c a ll fo r b i-a nnua l ma inte na nc e , inspe c tio n a nd re pa ir o f suc h HVAC Syste ms. T e na nt sha ll a lso e nte r into a nd ma inta in a se c urity c o ntra c t fo r the Pre mise s.

33

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SLIDE 34

TENANT’S OBLIGATIONS CONTINUED….

  • T

e na nt will no t o ve rlo a d the e le c tric a l wiring se rving the Pre mise s o r within the Pre mise s, a nd will insta ll a t its e xpe nse , sub je c t to the pro visio ns o f this L e a se , a ny a dditio na l e le c tric a l wiring whic h ma y b e re q uire d in c o nne c tio n with T e na nt’ s a ppa ra tus.

  • T

e na nt will re pa ir, a t its e xpe nse , a ny da ma g e to the Pre mise s, a rising o ut o f T e na nt’ s use

  • r o c c upa nc y the re o f, inc luding da ma g e c a use d b y b ring ing into the Pre mise s a ny

pro pe rty fo r T e na nt’ s use o r b y the insta lla tio n o r re mo va l o f suc h pro pe rty, a ll re g a rdle ss

  • f fa ult, o r b y who m suc h da ma g e sha ll b e c a use d, unle ss c a use d b y L

a ndlo rd, its a g e nts, e mplo ye e s, o r c o ntra c to rs; a nd in de fa ult o f suc h re pa irs b y T e na nt, L a ndlo rd ma y ma ke the sa me a nd T e na nt a g re e s to pa y to L a ndlo rd, upo n L a ndlo rd’ s de ma nd, a s Additio na l Re nt, the re a so na b le c o st the re o f.

34

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SLIDE 35

CONDITIONS APPLICABLE TO REPAIRS AND OTHER WORK

  • All re pa irs, re pla c e me nts a nd re c o nstruc tio n (inc luding , witho ut limita tio n, a ll Alte ra tio ns)

ma de b y o r o n b e ha lf o f T e na nt sha ll b e ma de a nd pe rfo rme d:

  • (a ) a t T

e na nt’ s c o st a nd e xpe nse ,

  • (b ) b y c o ntra c to rs o r me c ha nic s re a so na b ly a ppro ve d b y L

a ndlo rd,

  • (c ) a t le a st e q ua l in q ua lity o f ma te ria ls a nd wo rkma nship to the o rig ina l wo rk o r

insta lla tio n,

  • (d) in a c c o rda nc e with suc h re a so na b le re q uire me nts a s L

a ndlo rd ma y impo se with re spe c t to insura nc e to b e o b ta ine d b y T e na nt in c o nne c tio n with the pro po se d wo rk,

  • (e ) in a c c o rda nc e with a ll a pplic a b le la ws a nd re g ula tio ns o f g o ve rnme nta l a utho ritie s

ha ving jurisdic tio n o ve r the Pre mise s, a nd

  • (f) T

e na nt sha ll pro vide L a ndlo rd with a s b uilt dra wing s o f suc h Alte ra tio ns.

35

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SLIDE 36

LANDLORD’S OBLIGATIONS

  • L

a ndlo rd sha ll b e re spo nsib le fo r the pe rfo rma nc e o f a ll re pa ir, ma inte na nc e a nd re pla c e me nt o f (i) a ll struc tura l e le me nts, ro o f a nd e xte rio r wa lls o f the Building inc luding a ll suc h re pa irs a nd ma inte na nc e , (ii) pipe s, c o nduits, wiring a nd plumb ing syste m o utside

  • f b ut se rving the Pre mise s a nd (iii) fire pro te c tio n syste ms (the “L

a ndlo rd Re pa irs”), e xc e pt to the e xte nt suc h is pa rt o f a ny Alte ra tio ns. I n a dditio n, L a ndlo rd, a t the e xpe nse

  • f L

a ndlo rd, sha ll b e re spo nsib le fo r a ny ma jo r re pa ir o r re pla c e me nt to the HVAC syste m suc h a s re pla c e me nt o f a c o mpre sso r o r re pla c e me nt o f a unit. Pro vide d, ho we ve r, if a ny suc h wo rk, ma inte na nc e , re pa irs o r re pla c e me nts a re re q uire d a s a re sult o f the ne g lig e nc e o r misc o nduc t o f T e na nt o r a ny T e na nt Pa rtie s, T e na nt’ s fa ilure to re pa ir a nd ma inta in the Pre mise s o r the misuse o f the Pre mise s b y T e na nt o r the T e na nt Pa rtie s (a ny

  • f the fo re g o ing , a “T

e na nt Ne c e ssita te d Re pa ir”), T e na nt sha ll re imb urse L a ndlo rd fo r a ll re a so na b le c o sts pa id o r inc urre d b y L a ndlo rd fo r suc h wo rk upo n de ma nd a s Additio na l Re nt. L a ndlo rd sha ll a lso b e re spo nsib le fo r the pe rfo rma nc e o f la ndsc a ping (e xc luding sno w re mo va l) a nd re pa irs a nd ma inte na nc e o f the e xte rio r pa rking a re a s, side wa lks a nd truc k c o urts pro vide d tha t the c o st o f suc h a c tivitie s sha ll b e re imb ursa b le a s Ope ra ting E xpe nse .

  • No te : wha t sho uld b e a t L

a ndlo rd’ s so le c o st a nd e xpe nse ?

36

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SLIDE 37

INSURANCE

Pr ima r y T ype s of Insur a nc e

  • Compr

e he nsive Ge ne r a l L ia bility

Pro vid e s c o ve ra g e fo r b o d ily injury & pro pe rty d a ma g e d ue to a lle g e d ne g lig e nc e o f the insure d a nd inc lud e s the fo llo wing e le me nts:

  • A. Ge ne ra l Ag g re g a te
  • B. Pro d uc ts/ Co mple te d Ope ra tio ns Ag g re g a te
  • C. Pe rso na l & Ad ve rtising Injury
  • D. Oc c urre nc e L

imit (inc lud e s pre mise s/ o pe ra tio ns) No lo ng e r re fe rre d to a s “pub lic lia b ility insura nc e ”.

  • Automobile

Pro vid e s c o ve ra g e fo r b o d ily injury & pro pe rty d a ma g e re sulting fro m

  • pe ra tio n o f a mo to r ve hic le a nd inc lud e s the fo llo wing e le me nts:
  • A. L

ia b ility

  • B. Physic a l Da ma g e
  • C. Hire d / No n-Owne d – E

xc lud e d in the Ge ne ra l L ia b ility Po lic y

37

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SLIDE 38

INSURANCE CONTINUED…..

  • Wor

ke r ’s Compe nsa tion

Pro vid e s me d ic a l & d isa b ility c o ve ra g e to e mplo ye e s injure d in the c o urse

  • f e mplo yme nt. L

imits a re typic a lly g o ve rne d b y lo c a l sta tute .

  • Pr
  • fe ssiona l L

ia bility

Pro vid e s c o ve ra g e whe n the insure d c a use s a no the r pa rty a fina nc ia l lo ss d ue to pro fe ssio na l se rvic e s re nd e re d .

  • E

xc e ss L ia bility/ Umbr e lla

Pro vid e s a d d itio na l lia b ility c o ve ra g e e xc e ss o f prima ry g e ne ra l lia b ility, a uto , a nd wo rke r’ s c o mpe nsa tio n.

38

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SLIDE 39

CERTIFICATE OF INSURANCE

  • F
  • rm use d a s e vid e nc e o f insura nc e in c o mplia nc e with the le a se . T

ypic a lly inc lud e s the fo llo wing type o f info rma tio n: A. Na me o f Insure d B. Na me o f Insura nc e Ag e nc y C. Na me o f Insura nc e Co mpa ny D. T ype s o f Co ve ra g e Ca rrie d E . L imits o f Insura nc e F . E ffe c tive Da te o f Po lic ie s G. Po lic y Numb e rs H. Ve rific a tio n o f Re q ue ste d E nd o rse me nts

  • Do e s no t c o nta in: c o nfirma tio n tha t the pre mium ha s b e e n pa id

39

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SLIDE 40

BASIC TERMINOLOGY

  • Bind e r - pro vid e s a mo re d e ta ile d a c c o unt o f insura nc e c o ve ra g e a nd is

c o nsid e re d a “te mpo ra ry po lic y” until the o rig ina l is re c e ive d .

  • Po lic y - the a c tua l c o ntra c t b e twe e n the insura nc e c o mpa ny a nd the insure d

d e ta iling e xa c tly wha t is, a nd wha t is no t, c o ve re d .

  • E

nd o rse me nt - a mo d ific a tio n to the o rig ina l po lic y.

  • Ad d itio na l Insure d - a n e nd o rse me nt whic h e xte nd s the rig hts o f the po lic y to the

pe rso n na me d a s a d d itio na l insure d .

  • Ind e mnific a tio n - c o ntra c tua l tra nsfe r o f lia b ility fro m o ne pa rty to a no the r.
  • Wa ive r o f Sub ro g a tio n – a pro visio n tha t wa ive s the rig ht o f the insura nc e c o mpa ny

to re c o ve r c la ims pa id fro m a spe c ific pa rty.

40

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SLIDE 41

TENANT INDEMNIFICATION

  • T

e na nt will de fe nd a nd will inde mnify L a ndlo rd a nd Ag e nt a nd sa ve the m ha rmle ss fro m a nd a g a inst a ny a nd a ll c la ims, a c tio ns, da ma g e s, lia b ility a nd e xpe nse (inc luding , b ut no t limite d to , re a so na b le a tto rne ys’ fe e s a nd disb urse me nts) c o nne c te d with the lo ss o f life , pe rso na l injury o r da ma g e to pro pe rty o r b usine ss a rising fro m, re la te d to , o r in c o nne c tio n with the pe rfo rma nc e o f T e na nt’ s Wo rk, the o c c upa nc y o r use o f the Pre mise s (inc luding , witho ut limita tio n, the pre se nc e o f mo ld o r b a c te ria in the Pre mise s a nd c la ims fro m e mplo ye e s fo r “sic k-b uilding ” illne sse s, whe the r o r no t re la te d to T e na nt’ s fa ilure to ma inta in its HVAC syste m pro pe rly) o r o c c a sio ne d who lly o r in pa rt b y a c t o r

  • missio n o f T

e na nt, its c o ntra c to rs, sub c o ntra c to rs, sub te na nts, lic e nse e s o r c o nc e ssio na ire s, o r its o r the ir re spe c tive a g e nts, se rva nts o r e mplo ye e s o n a ny pa rt o f L a ndlo rd’ s pro pe rty o r the Sho pping Ce nte r o r b y re a so n o f T e na nt’ s b re a c h o f a ny o f the pro visio ns o f this L e a se . T e na nt sha ll no t, ho we ve r, b e lia b le fo r da ma g e s o r injury

  • c c a sio ne d b y the g ro ss ne g lig e nc e o r willful misc o nduc t o f L

a ndlo rd, Ag e nt o r the ir a g e nts, e mplo ye e s, c o ntra c to rs o r se rva nts, unle ss suc h da ma g e o r injury a rise s fro m pe rils a g a inst whic h T e na nt is re q uire d b y this L e a se to insure .

41

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SLIDE 42

TENANT INDEMNIFICATION

  • Unle ss a nd the n so le ly to the e xte nt suc h da ma g e is c a use d b y the g ro ss ne g lig e nc e o r

willful misc o nduc t o f L a ndlo rd, Ag e nt, o r the ir re spe c tive a g e nts, se rva nts, a nd e mplo ye e s, ne ithe r L a ndlo rd, Ag e nt no r the ir re spe c tive a g e nts, se rva nts, e mplo ye e s o r c o ntra c to rs (c o lle c tive ly, the “Re le a se d Pa rtie s”) sha ll b e lia b le fo r, a nd T e na nt, in c o nside ra tio n o f L a ndlo rd’ s e xe c utio n o f this L e a se , he re b y re le a se s a ll c la ims fo r lo ss o f life , pe rso na l injury

  • r b usine ss susta ine d b y T

e na nt o r a ny pe rso n c la iming thro ug h T e na nt, a nd T e na nt re le a se s the Re le a se d Pa rtie s fro m a ll c la ims fo r da ma g e to pro pe rty o f T e na nt a nd a ny pe rso n c la iming b y, thro ug h o r unde r T e na nt e ve n if c a use d b y the g ro ss ne g lig e nc e o r misc o nduc t o f the Re le a se d Pa rtie s, re sulting fro m a ny fire , a c c ide nt, o c c urre nc e o r c o nditio n in o r upo n the Sho pping Ce nte r o r a ny pa rt the re o f (inc luding , witho ut limita tio n, the Pre mise s a nd the b uilding o f whic h the sa me is a pa rt), inc luding , b ut no t limite d to , suc h c la ims fo r lo ss o f life , pe rso na l injury o r da ma g e re sulting fro m (1) a ny de fe c t in o r fa ilure o f plumb ing , he a ting o r a ir-c o nditio ning e q uipme nt, e le c tric a l wiring o r insta lla tio n the re o f, wa te r pipe s, sta irs, ra iling s o r wa lks; (2) a ny e q uipme nt o r a ppurte na nc e s b e ing

  • ut o f re pa ir; (3) the b ursting , le a king o r running o f a ny ta nk, wa shsta nd, wa te r c lo se t,

wa ste pipe , dra in o r a ny o the r pipe o r ta nk in, upo n o r a b o ut the Sho pping Ce nte r; (4) the b a c king up o f a ny se we r pipe ; (5) the e sc a pe o f ste a m o r ho t wa te r; (6) wa te r, sno w o r ic e b e ing upo n o r c o ming thro ug h the ro o f o r a ny o the r pla c e upo n o r ne a r the Pre mise s o r the b uilding o f whic h the sa me is a pa rt o r o the rwise ; (7) the fa lling o f a ny fixture , pla ste r, c e iling tile o r stuc c o ; (8) b ro ke n g la ss; (9) a ny a c t o r o missio n o f o the r te na nts o r o the r

  • c c upa nts o f the Sho pping Ce nte r. T

he fo re g o ing wa ive r a nd re le a se is inte nde d b y L a ndlo rd a nd T e na nt to b e a b so lute , unc o nditio na l a nd witho ut e xc e ptio n a nd to supe rse de a ny spe c ific re pa ir o b lig a tio n impo se d upo n L a ndlo rd he re unde r.

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SLIDE 43

LANDLORD INDEMNIFICATION

  • L

a nd lo rd will d e fe nd a nd ind e mnify T e na nt a nd sa ve T e na nt ha rmle ss fro m a nd a g a inst a ny a nd a ll c la ims, a c tio ns, d a ma g e s, lia b ility a nd e xpe nse (inc lud ing , b ut no t limite d to , re a so na b le a tto rne ys’ fe e s a nd d isb urse me nts) in c o nne c tio n with the lo ss o f life o r pe rso na l injury a rising fro m, re la te d to , o r in c o nne c tio n with L a nd lo rd ’ s willful misc o nd uc t o r g ro ssly ne g lig e nt a c ts o r o missio ns in the Co mmo n Are a s o f the Sho pping Ce nte r. L a nd lo rd sha ll no t b e lia b le fo r d a ma g e s o r injury

  • c c a sio ne d b y the ne g lig e nc e o r willful misc o nd uc t o f T

e na nt, its a g e nts, e mplo ye e s, c o ntra c to rs o r se rva nts.

  • Ind e mnific a tio n Co nsid e ra tio ns:
  • Sc o pe o f ind e mnific a tio n
  • Pa rtie s c o ve re d b y ind e mnific a tio n
  • Insura nc e c o ve ra g e vs. sc o pe o f ind e mnific a tio n
  • Gro ss ne g lig e nc e a nd willful misc o nd uc t

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