Building lease contract language
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  1. #1
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    Default Building lease contract language

    I’m about to lease another warehouse to use as a machine shop. I’ve signed many lease contracts in past years with other landlords. The previous contracts all included say 30 days for lessee to report problems with the property that landlord should fix within x time. This very detailed lease contract had no such provision and I asked that one be included. Revised lease received with some other changes I wanted but not that one. I asked again and they revised it to include this:
    “ Lessor shall deliver the Demised Premises with all base building systems in good working order. Otherwise, Lessee agrees to accept the Demised Premises in “as is” condition with Lessor under no obligation to make the Demised Premises ready for, or usable by Lessee, Lessee’s use and occupancy. “

    That worries me a little. I’m well aware that most language in the lease is there to protect the lessor, but I’m beginning to wonder if there’s some significant problem with the building itself. Should I worry or is this just a little overkill in their CYA efforts? I don’t have to lease this place but the xtra space and much better Power situation would make my life easier, so I think it’ll be worth the $6K/month (it is 6k sq ft, rate is average for the DC area.)

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    Those 2 sentences are contradictory. First one obligates them to fix stuff. Second one doesn't obligate them to do anything but does obligate you to accept things as-is.

    I wouldn't sign that. I'd cross out the second sentence and send it back with a list of what I considered 'base building systems' I required to be in good working order as an addendum.

    Of course this leaves the definition of 'good working order' arguable....

    PDW

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    Sounds a lot like there are problems with the space that they have no intention of fixing. I would walk. Let them know why you intend to back out and you just might get an explanation. Probably not though.

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    Thanks. It was so hard to get them to put even that confusing language in; walking may be what I do. I really hate being burned in an expensive deal like this one and since 2 years is the minimum term I could get, if there’s something significantly wrong there, I’m left burning for two full years. What attracted me to the place was 480v/3 x 200 amps on the Wall. But 2 years’ rent is almost $150k. And to think I was horrified by the thought paying maybe $25k to bring more amps to my present location.

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    7198a6c2-fbcd-4c4a-9056-f512c3f7e9f4.jpgbf637c00-2394-43af-ad80-887328478a63.jpg

    Thought I’d post pictures even though I’ll probably back out of the deal today-haven’t signed anything yet nor spent a dime. Place may be haunted for all I know, and I’m not superstitious. Btw the two transformers pictured are both buck types.

    One other issue that’s not yet resolved is insurance. All landlords I’ve dealt with require proof of liability and glass breakage insurance. One small part of our business involves online sales, when we have extra stuff we’ll advertise it on Craigslist, Eboo, whatever. This time around that caused all the big insurers to decline to insure us, according to our broker, who is now trying smaller companies. Apparently since the Equifax disaster and other big companies getting hacked for customer data, insurers shy away from anyone doing online sales. So Amazon and Walmart won’t be able to get insurance? Somehow I don’t think they’ll have that problem.
    Last edited by Cannonmn; 11-28-2017 at 05:58 AM. Reason: Add

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    Quote Originally Posted by Cannonmn View Post
    Thanks. It was so hard to get them to put even that confusing language in;
    My experience with commercial leases, is that the landlord would not edit the lease for me at all. What I did was edit the lease to make it say things that were acceptable to me, signed my version, and sent it back. That has worked out for me, and I have a good landlord. Talking to other business owners, my landlord is better than many others.

    It sounds like you verbally asked them to make changes, and aren't happy with what they wrote. If so, just cross out the parts you don't like, and write in what you want it to say. If you have the clauses from the previous leases that you like, use those for reference. If you do the work of drafting the wording yourself, sign and send back the lease, you make the path of least resistance for the landlord to just accept. You'll probably get the landlord to agree to more that way, than if you let them write the changes.

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    Quote Originally Posted by Cannonmn View Post
    “ Lessor shall deliver the Demised Premises with all base building systems in good working order. Otherwise, Lessee agrees to accept the Demised Premises in “as is” condition with Lessor under no obligation to make the Demised Premises ready for, or usable by Lessee, Lessee’s use and occupancy. “
    What does the contract say about your obligation to return the Demised Premises in a particular condition?

    What about maint issues after? Roof leaks? Have you spoken with your neighbors?

    Base Building Systems is a legal term. Though the law and case law often varies by state.

    Base Building Systems - Local law 87

    "Base building systems comprise of building’s central energy-using components such as the primary mechanical and electrical systems (heating, air conditioning, ventilation, electricity, water supply, domestic hot water, gas), lighting systems, building envelope (roofing and facade) and perpetual-occupancy areas like lobbies, elevators, stairs as well as fire escapes. Although the building envelope does not consume energy, its components (walls, windows, roofing, doors, shading devices) impact energy consumption."

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    Thanks, I’ll look for anything on condition upon leaving, all I recall offhand is requirement for it to be “broom clean.”

    Here’s another related para:

    “ 29. "AS IS": Except as provided in Section 2 and the next sentence of this Section 29 of this Lease, Lessor shall not be required to do any work in, on or upon the Demised Premises or the Building to ready the same for Lessee’s use or occupancy of the Demised Premises, it being acknowledged that Lessee is fully familiar with the condition of the Demised Premises and that Lessee has either undertaken an exhaustive examination of the same prior to the execution of this Lease or has waived the opportunity to undertake such inspection. Lessor, at its sole cost and expense, shall do the work described in the Exhibit D, Work Agreement, if any. All other work necessary for Lessee’s use, occupancy and operation of the Demised Premises for their intended purposes shall be done by Lessee, at Lessee’s sole cost and expense, pursuant to the terms and conditions of this Lease.”

    I took a business law course and I recall the desire in contracts to avoid “warranty of adequacy for use for a particular purpose” and this para seems like that stuff.

  13. #9
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    Here’s one you requested:

    4. REPAIR AND MAINTENANCE: Lessor shall (other than for any repairs or replacements required as a result of the acts or omissions or negligence of Lessee, its agents, officers and its and their employees or invitees) maintain in good condition, comparable to similar buildings in Fairfax County, Virginia, the roof and structural portions of the Building, all landscaping, curbing, sidewalks, roads, parking areas, driveways and all interior and exterior common areas of the Buildings and systems used in common by the tenants of the Buildings and generally keep the same clean. Lessee will maintain in good order, condition and repair (including replacements) the entire Demised Premises, including all doors and door frames, windows, fixtures, machinery and equipment therein. Garbage and refuse shall be stored at such locations and in such containers as shall be approved by Lessor, and if required by Lessor or any municipal or governmental directive, Lessee shall sort and separate its trash and refuse as it shall be directed by Lessor or the applicable municipal or governmental authority, as the case may be. Lessee agrees that extraordinary waste, such as crates, cartons, boxes, etc. (the discarding of used furniture or equipment being deemed extra-ordinary waste) shall be removed from the Building and disposed of by Lessor, at Lessee's cost and expense, and that Lessee, upon Lessor's demand, will promptly reimburse Lessor for such removal and disposal. Lessee shall be responsible for repairs and restoration to the Demised Premises resulting from, occasioned by, or arising from, any break-ins, burglaries or attempted break-ins or burglaries in, on or to the Demised Premises.

    And another:

    12. SURRENDER AND TERMINATION: All fixtures, equipment, improvements and appurtenances attached to or built into the Demised Premises prior to or during the term, whether by Lessor, at its expense or at the expense of Lessee, or by Lessee, shall be and remain part of the Demised Premises and shall not be removed by Lessee at the end of the term, unless Lessor, at least fifteen (15) days prior to the expiration of the term, notifies Lessee to remove the same. All of Lessee's removable trade fixtures and removable business equipment may be removed by Lessee upon condition that such removal does not materially damage the Demised Premises or the Building and that the cost of repairing any damage to the Demised Premises or the Building arising from such removal shall be paid by Lessee. Any property of Lessee or of any sublessee or occupant that Lessee has the right to remove or may hereunder be required to remove which shall remain in the Building after the expiration or termination of the term of this Lease shall be deemed to have been abandoned by Lessee, and either may be retained by Lessor as its property or may be disposed of in such manner as Lessor may see fit; provided, however, that, notwithstanding the foregoing, in the event of any failure of Lessee to promptly remove the items requested by Lessor to be removed and/or restore any damage to the Building or Demised Premises occasioned by such removal, Lessor, at Lessee's cost and expense, may remove the items Lessee failed to remove and/or effect all repairs to the Building and the Demised Premises. If such property or any part thereof shall be sold, Lessor may receive and retain the proceeds of such sale and apply the same, at its option, against the expenses of the sale, the cost of moving and storage, any arrears of base rent, additional rent or other charge payable hereunder and any damages to which Lessor may be entitled hereunder or pursuant to law. Upon the expiration or other termination of the term of this Lease, Lessee shall quit and surrender to Lessor the Demised Premises, broom clean, in good order and condition, ordinary wear excepted, and Lessee shall (i) remove all of its property and other items that it is permitted or required hereunder to remove and (ii) repair all damage to the Building and/or the Demised Premises occasioned by such removal. Lessee's obligation to observe or perform this covenant shall survive the expiration or other termination of the term of this Lease.
    Last edited by Cannonmn; 11-28-2017 at 08:43 AM. Reason: Add

  14. #10
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    Quote Originally Posted by Cannonmn View Post
    ...I took a business law course and I recall the desire in contracts to avoid “warranty of adequacy for use for a particular purpose” and this para seems like that stuff.
    It's a building. Fitness for a particular purpose isn't really a factor. The clause just says the lessor is not obligated to do a build-out. If there are 2 offices and you need 3, it's up to you to put in the 3rd office.

    It all looks like standard boilerplate to me. I'd add in a renewal clause, a right of first refusal, and a termination clause that gives you some limit of liability in the case of early termination- 90 or 180 day notice, etc.

    You can't be held liable for the entire lease if you early terminate- only those months that the building is vacant.

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    Since I was having only limited success with all the words and paper, I went around to the other tenants on either side, introduced myself, and asked who the previous tenant was so I could ask them about the place. Turns out it was one of the Generals (big company.). Found their real estate manager locally, who said he didn’t recall any problems with the lease or the property. So for me that’s better than anything I could get in writing.

    The insurance agent found a company that would carry the required liability and glass insurance for a premium that’s pocket change if I didn’t have to have personal property insurance, and I don’t. So thanks for the advice, I’m looking forward to hooking up the 480 volt machines in that place after my electrician gets the cables installed. I got them to add to the lease words that say I have permission to have a licensed electrician install the Power distro system per code as needed.
    Last edited by Cannonmn; 11-28-2017 at 02:51 PM. Reason: Fix


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