Receiving that first response from a Tenant we’ve not encountered before, after waiting for their review of a lease, it is always interesting.
We represent both Tenants and Landlords; this article has been written from the perspective that I am representing the Landlord.
At times the Tenant is prepared to execute the document “as is” and at times they will request hundreds or more of changes. We have seen request that number exceed 1,000 changes.
We know all commercial real estate leases are written with a bias towards the Landlord, but what are the main reasons that 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 may 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 that a standard contract may have gone through many previous negotiations over the years, and then after a forensic review a sharp lawyer finds a flaw that has been embedded in the document all along.
An overzealous lawyer or real estate broker
I would like to think that most lawyers and real estate brokers have the best interests of their clients at heart.
Sometimes that 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.
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:
ABC’s of Leasing: Pitfalls for first-timers
How to tell if you have a binding lease
ABC’s of Leasing: Do I have to read all 40 pages of this lease?
Posted by Barry Stuart
