LEASE NEGOTIATION

Lease negotiations are never a simple task, and if done incorrectly or ineffectively, can result in unnecessarily accepting higher financial costs and greater legal responsibilities.  There is a fundamental paradox that resides at the core of successful negotiations: generating value and claiming value.  You generate value for the other side by presenting the benefits that satisfy their financial demands, while placating their concerns.  Meanwhile, it is necessary that you concurrently claim sufficient value in the transaction, which is only possible by not giving too much away.  This is can be a very delicate balancing act, which can easily be tipped against you with inadequate legal counsel.

Lawyer’s Role to Negotiations

Correctly utilizing the right lawyer early in the negotiation process can have significant benefits to obtaining a more favorable result, including:

-          focusing on the real objectives

-          eliminating distractions and insignificant matters

-          defusing emotion (emphasis on business practicalities)

-          precluding hidden costs and obligations

-          experience – an invaluable resource

-          research and adaptation of appropriate legal precedents

-          role assumption: devil’s advocate; good cop - bad cop

-          making it workable (some strategies simply don’t work)

-          maintaining legal compliance

LEASE REVIEW

The wording of a lease agreement frequently does not match the presumed straightforward business arrangements that were negotiated.  Instead, there is a tendency to find hidden meanings, unexpected costs and incompatible obligations structured into most lease agreements.  This isn’t necessarily intentional, but it must be dealt with correctly – otherwise you will be paying the price for not engaging the right lawyer to review the offer to lease and final lease agreement, and correct the inaccuracies and remove the hidden costs.

Why Lease Agreements Need to be Reviewed

-          fails to mirror terms that were negotiated (i.e., in the offer to lease)

-          contain hidden meanings in all the legal jargon

-          nullify the benefit of negotiated terms with legal clauses

-          imposes unexpected costs that can adversely impact your financial operations

-          insert unwarranted obligations and restrictions

-          fails to account for the dynamic elements of your business and its advancement

-          has an inadequate exit strategy

LEASE DRAFTING

Because of technological innovation, the art of drafting an effective lease agreement is being replaced by an over-reliance on templates and standard form agreements.  This is a dangerous trend, since it frequently results in a deviation from negotiated terms and/or imposes unwanted and inappropriate obligations and restrictions on the parties.  Given the importance of most lease agreements to a business’ success, such imprecision should not be permitted in your lease drafting and that is why you need the right lawyer to draft a lease agreement that advances your business, not impede it.

Importance of a Clear and Concise Lease

-          saving future time, money and business relationships

-          minimizes animosity, so that business relations are progressive, with issues capable of acceptable resolution

-          fighting against confusion and misunderstanding – thereby avoiding costly court litigation (and if taken to court, you can understand your rights as they have been clearly set out)

-          protecting you from negotiating away important rights and safeguards

-          obtaining important concessions and benefits from the other side

-          identifying traps and pitfalls in the other side’s requests

-          specific to your business operations and financial concerns

LEASE DISPUTE RESOLUTION AND LITIGATION

Commercial leases are invariably subject to disputes and differences of opinion, and the question is how do you handle these matters to minimize the disruption and cost to your business and, where possible, salvage your current landlord-tenant relationship.  Though the objective is to resolve the dispute through intelligent negotiation, when the parties become entrenched it their respective positions (often out of necessity), litigation can become the only path to dispute resolution, whether it is through the courts, mediation or alternative dispute resolution.

Although the most common cause of litigation is a tenant defaulting on its payment obligations, disputes arise from countless other violations of the lease agreement, including:

-          delayed possession in receiving the leased premises

-          failure to satisfy specifics promised in the lease agreement

-          right to quiet enjoyment

-          restrictive covenants and specific use

-          responsibilities with respect to common areas

-          maintenance, repairs and replacements

-          validity of charges and additional rents

-          fixtures and leasehold improvements

-          subleasing and assignment (including corporate tax planning)

-          mortgagees, co-tenants and other third party rights

-          guarantees, surety and indemnity

-          bankruptcy restructuring and insolvency

-          third party injuries and lawsuits

-          insurance and costs related to structural damage

-          environmental violations

-          by-law and regulatory infringement

-          obligations upon termination

For knowledgeable and experienced legal representation in negotiating, reviewing and drafting lease agreements, and protecting your business’ legal rights, contact leasing lawyer Chris Neufeld at:

Chris@LeasingLawyer.ca, 403-400-4092 (Alberta), 416-887-9702 (Ontario)

For commercial landlords: New Lease - Revised Lease - Lease Amendment / Alteration - Lease Assignment / Transfer - Subleasing - Lease Termination

Leasing lawyer Chris Neufeld's legal practice includes the representation of landlords and tenants in commercial leasing transactions, including office, retail, industrial, warehouse, government and special use properties, principally in the Alberta and Ontario real estate markets, with its principal office at 77 Tuscany Ridge Mews NW, Calgary, Alberta. or more information pertaining to business go to www.calgarybusinesslawyer.ca. Copyright 2008-14.

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