Drafting and Negotiating Commercial Leases John H. Hawthorne - - PowerPoint PPT Presentation

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Drafting and Negotiating Commercial Leases John H. Hawthorne - - PowerPoint PPT Presentation

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Drafting and Negotiating Commercial Leases John H. Hawthorne Partner, Protorae Law PLLC June 1, 2015 Drafting and Negotiating Commercial Leases Introduction to Drafting Commercial Leases Lease Provisions 2 Introduction to Drafting

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Drafting and Negotiating Commercial Leases

John H. Hawthorne Partner, Protorae Law PLLC June 1, 2015

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Drafting and Negotiating Commercial Leases

  • Introduction to Drafting Commercial Leases
  • Lease Provisions

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SLIDE 3

Introduction to Drafting Commercial Leases

  • Types of Leases
  • The Drafting Process
  • Commercial Lease Checklist

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Types of Leases

  • Retail
  • Office
  • Restaurant
  • Mixed Use
  • Additional Forms and Types

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The Drafting Process

  • The Letter of Intent (LOI)
  • Protecting the Unknown Interests of the Client

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Lease Provisions

  • ‘Basic’ Lease Provisions
  • Insurance and Casualty
  • Subordination
  • Construction

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‘Basic’ Lease Provisions

  • Rate and Description
  • Term and Renewals
  • CAM Expenses
  • Guarantees
  • Abatements
  • Real Estate Taxes

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Commercial Lease Checklist

  • Financial Terms
  • Terms of the Premises
  • Common Areas and Their Expenses/Charges (CAM)
  • Assignment and Subletting
  • Default
  • Repairs and Physical Alterations
  • Insurance and Indemnification Provisions
  • Subordination and Attornment Provisions
  • Casualty, Condemnation and Eminent Domain
  • Signage and Parking
  • Relocation
  • Miscellaneous Provisions

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Easements and Other Servitudes in the Commercial Context

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Easements and Other Servitudes in the Commercial Context

  • Servitudes and Rights Associated With Them
  • Terminology: Easement v. Covenant v. License v.

Lease

  • Creation of Servitudes
  • Altering a Servitude
  • Abandonment and Extinguishment

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Servitudes: Rights and Types

  • Easement
  • Covenant
  • License
  • Lease

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Easements

  • Privilege without profit
  • Right to use but NOT right to possess
  • Servient v. Dominant
  • Express Easement
  • Appurtenant v. In Gross

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Creation of the Easement

  • Express Easement
  • Implied Easement
  • Easement by Necessity
  • Prescriptive Easement
  • Adverse
  • Under Claim of Right
  • Exclusive
  • Continuous
  • Uninterrupted
  • Knowledge & Acquiescence

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The Covenant

  • Agreement between one or more parties that governs

how real property will be utilized

  • Right to use but NOT a possessory interest
  • Affirmative Obligations
  • Negative Covenants

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Creation of the Covenant

  • Restrictive Covenants
  • Running with the Land
  • Equitable Easements or Equitable Servitudes
  • Enforcement of the Covenant

– Privity – Horizontal – Privity – Vertical – Intent – Touches and Concerns – In Writing

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The License

  • Right to utilize but NO interest in the real property at

all

  • Conditional Time and Use
  • Creation of the License

– Express agreement – Actions of the owner

  • Practical Examples in the Commercial Context

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The Lease

  • Right to possess AND utilize
  • Interest in the real property conditioned upon time

and use

  • Interest that can be superior to future conveyance or

liens

  • Back to example of License v. Lease
  • Creation of the Lease

– Oral v. Written

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Can a Landowner Alter a Servitude?

  • Easements
  • Covenants
  • Lease
  • License

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Abandonment and Extinguishment

  • Covenants
  • Easements
  • Licenses
  • Leases

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Purchase and Sale Agreements

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Purchase and Sale Agreements

  • Price and Payment Terms
  • Representations and Warranties, Conditions and Covenants
  • Timing for a Smooth Transition
  • Real World Remedies
  • Risk of Loss
  • Negotiation of Other Provisions
  • Sample Purchase/Sale Agreement Review

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Spelling out the Price and Payment Terms

  • Price
  • Deposit
  • Payment Terms

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Reps and Warranties / Covenants and Conditions

  • Representations and Warranties
  • Covenants
  • Conditions
  • Importance of Each
  • Examples of Each

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Getting Timing Down for a Smooth Transition

  • Contingency Periods
  • Study Period
  • Financing Contingency
  • Appraisal Contingency
  • Negotiation of Time Periods
  • Interests of Each Party

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Real World Remedies

  • Monetary Damages
  • Specific Performance
  • Tying up the Deposit
  • Negotiating the Default Provisions

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Risk of Loss

  • Common Law Rule
  • Negotiating the Risk
  • Assumption of the Risk
  • Transfer Date & Time
  • Recordation v. Delivery of the Deed

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Negotiating Other Provisions

  • Title
  • Time of the Essence

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Sample PSA Review

  • Attached Purchase and Sale Agreement
  • Discussions with the Client
  • Knowing What to Fight / Pick the Battle

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Questions

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John H. Hawthorne

Partner

jhawthorne@protoraelaw.com 703.942.6147

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