Leasing 101: The Miscellaneous (but still important) Provisions

December 6, 2018

 

There almost always is a section at the end of a lease labeled ‘Miscellaneous’ into which shorter provisions that do not warrant their own section are dumped. 

 

Do not let the ‘Miscellaneous’ label or the random assortment of topics fool you.  These are important, and each one should be reviewed carefully. 

 

In no particular order, here is a brief discussion of four topics that usually appear in this section:

 

Attorney's Fees
A lease should contain a ‘prevailing party’ provision regarding attorney's fees.  In the event of a dispute between landlord and tenant that results in litigation or other action, this provision would require the losing party to pay the winning party’s legal fees. 
 
The purpose of this is to encourage the parties to resolve disputes quickly and to prevent unnecessary litigation.  For a tenant with a growing business, this can be invaluable because it prevents a landlord with deeper resources from bullying a tenant. 
 
Without this provision, a Landlord could shirk its maintenance and operation duties because it knows the tenant might be less likely to incur the costs of litigation. 
 
If a tenant clearly is in the right, a landlord also will be less likely to engage in a battle of attrition in litigation because it knows it will have to pay for this strategy.

 

Notices 
It is worth looking at the legal notice section, which states how one party can sending notices to the other, to make sure that the process with be practical for tenant’s business. 
 
First, the notice address should be checked to make sure it is correct.  Should the notice go to the store or the factory or the corporate headquarters? 
 
Second, is the method of delivery practical?  Faxes are fairly outdated.  Overnight delivery is very useful.  Some parties prefer email, but despite the virtual certainty of delivery, emails can get lost in inboxes. 
 
It is worth spending two minutes to think through this before the lease is signed.

 

Broker's Fees 
Landlord typically pays broker commissions for both landlord’s broker and tenant’s broker, and the lease should state this.  There also should be a mutual indemnity between landlord and tenant for any other brokers or parties claiming a commission.

 

Rules and Regulations 
A lease often will list the rules and regulations of the building or center, and these may be attached as an exhibit.  Spend a few minutes to review the rules to see if there are any issues. 
 
Can tenant operate a coffee maker or a small kitchen?  What are the rules on trash storage?  The rules and any future changes by landlord should be held to a reasonable standard.  The rules also should be enforced equally among all tenants in the center or building.
 
By spending a few minutes reviewing the ‘Miscellaneous’ section, a prospective tenant can ensure that problems will be minimized during the day-to-day operations in the leased premises.  This is important as it will allow tenant to focus on its business and not on disputes with landlord. 

 

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