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Receiving that first response from a tenant we’ve not encountered before, after waiting for their review of a lease, is always interesting.
Columnist Barry Stuart, ICR Commercial.
We represent both tenants and landlords; this article has been written from the perspective in which I am representing the landlord.
At times the tenant is prepared to execute the document “as is” and at times they will request hundreds of changes, or more. We have seen that number exceed 1,000 changes.
We know all commercial real estate leases are written with a bias toward the landlord, but what are the main reasons tenants object to the document?
A flawed document
After an offer to lease is agreed to by both parties, the material terms of the agreement are transferred to and expanded upon in the formal lease document.
This document might typically be sourced from the listing broker, the landlord or the landlord’s solicitor.
Not all lease documents are created equally.
I find it worth mentioning a standard contract might have gone through many previous negotiations over the years, and then after a forensic review a sharp lawyer finds a flaw which has been embedded in the document all along.
Overzealous lawyer or real estate broker
I would like to think most lawyers and real estate brokers have the best interests of their clients at heart.
Sometimes the position of “best interest” can be carried too far.
Negotiations can carry on to the point where a party becomes frustrated and walks away.
That’s why it’s important for the client to stay involved to ensure the professional representing them is seeking a reasonable outcome.
A shrewd negotiator
Nothing surprises me when it comes to witnessing the shrewd tenant negotiator. Here’s one example, in which a tenant strategized to obtain possession of a property before signing the lease. And, the tenant was successful.
I get it! The tenant or tenant’s solicitor may have gone through what could be hundreds of negotiations with different landlords and encountered many different games.
They may get to a place where they approach the negotiation with the goal to secure every benefit they can.
And . . . other times, it’s just the nature of the cat!
Fortunately, we win far more than we lose.
It is helpful to keep an objective view of the process in order to stay focused on the goal of completing the deal.
Some other lease negotiation related posts include:
– ABCs of Leasing: Pitfalls for first-timers
– How to tell if you have a binding lease
– ABCs of Leasing: Do I have to read all 40 pages of this lease?
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