The Importance Of Retaining An Attorney For Lease Agreements
There are a number of reasons you should hire a lawyer to draft or review a lease agreement. First, most leases are drafted by a landlord, and the legal protections offered to you in a lease will depend on whether you are drafting the lease or you are a tenant. If you are drafting the lease, you want the lease to meet your business goals at the end of the deal. You need your lawyer to pick out the best provisions from other leases. You need help with drafting the terms of the lease so it meets the business needs and is legally-binding on both parties. For example, you don’t want to write the lease in a way that traps you into the deal for longer than you need , or in a way that prevents you from charging overages to tenants. These may seem like basic business points, but the drafting matters and a lawyer needs to be involved.
A lawyer is also necessary for interpreting complicated lease provisions. For example, a lease may have a provision about liability that relates to insurance implications and the insurance may tie back to some other provision in the lease. There are a lot of moving parts in a lease. You want a lawyer who knows how to draft the provision and make sure that it is interpreted how you want.
Finally, a lawyer can help you work out any conflicts that come up during the negotiation process or dispute resolution process when there is a conflict in the contract.
Types Of Lease Agreements Lawyers Work With
It would be impossible to discuss all the varieties of lease agreements that lawyers can assist clients on in one blog post. For example, residential agreements or lease may be simple or complex depending on the level of sophistication of the landlord or property manager. The lawyers that work on lease agreements for their clients will at least negotiate the lease agreement terms and review them for conformance with state or local real estate laws and less frequently, will handle litigation involving breach of the lease.
Commercial lease agreements, whether they are office space or retail may be more complicated as the transactions use a variety of industry standard forms as the starting point for negotiation. The lawyers will negotiate the terms of the lease and may bring in other professionals to assist the client in addressing hidden costs or in advising the client about the industry standard. As a recent example, I helped a tenant with a commercial lease negotiation to remove a "right of first offer" that would have resulted in lower rents for my client according to the industry standard practices. Lawyers also help with rent escalation clauses redesign leases or amendments to conform to local laws. The lawyers also help clients navigate a problem with a rent increase by using a qualified appraiser to show that an increase was above market value.
Lawyers can assist both sides of the lease transaction including landlords who may need help with the lease itself or the complex eviction process if tenants are behind in their rent or not abiding by the lease terms. This could involve a pending court action requiring immediate attention or a decision whether an eviction is the best method of getting the tenant out of the space.
The following is a brief overview of the various types of leases lawyers can help with:
Common Clauses Of Lease Agreements
Lawyers take special note of the key clauses in lease agreements. These include terms on when and how rent is determined and adjusted, options to renew or extend the lease term, the identity and responsibility of the parties for the care and maintenance of the property, and the circumstances under which the lease can be terminated.
Of course, there are many other provisions and terms that are of importance to landlords and tenants. For example, clauses that deal with the identity of the parties to the agreement, the purpose of the lease, the size of the premises, parking rights and obligations, and use are all of importance when negotiating and drafting lease agreements.
Three things matter for leases: how much is the base rent, how much are the increases, and how and when is the rent paid? It is no accident that these issues occupy a disproportionate amount of lease negotiation and drafting time.
Another key for landlords is to determine and establish their responsibilities for maintenance and repair of the premises. The landlord’s responsibilities might include the care and maintenance of structural, architectural, mechanical and electrical components of the leased premises such as the following: the roof, exterior walls, the foundation, heating systems, air conditioning, parking areas, elevators, escalators, plumbing and electrical systems, and even landscaping.
How To Identify The Right Lease Agreement Lawyer
When researching how to negotiate a lease agreement, you will likely come across multiple articles that suggest hiring a lawyer. But, with so many different fields of law and many lawyers pursuing different practice areas, how do you know which lawyer is right for your needs? For lease agreements, you typically want to seek out a qualified real estate attorney or a more general business lawyer. While a property lawyer might understand your specific needs better when negotiating on a commercial lease, it’s a business lawyer that understands how a lease agreement fits into your overall business, including any provisions that might be confusing or land you in legal disputes. One of the best ways to know if a lawyer is right for you is to ensure he or she has experience dealing with the negotiation of lease agreements. Ask if the attorney has handled similar cases before. If so, how long ago was that case? Does the lawyer have any results to share? Will the lawyer be available during all phases of your business? If you’re hiring a lawyer to negotiate on your behalf, make sure that you choose someone that is a strong negotiator. Some people may back down when a deal becomes contentious, but a lawyer with strong negotiation skills will work hard to ensure you receive the best possible lease agreement, without risking your reputation or losing strong partnerships with relevant businesses. Make sure that you also choose a lawyer that has strong communication skills. While this is an important trait for lawyers of all practice areas, a lawyer that can both verbally and written express your ideas and ambitions with ease might save you time, money, and bad management during negotiations. Finally, you should be very clear with your lease agreement lawyer about the results you want to achieve and your budget for their legal fees. A good lawyer will be respectful of your needs and be honest with you about what you can and can’t achieve with their help.
The Fees Of Lease Agreement Attorneys
The cost of hiring a lawyer to review a lease agreement is within the budget of most tenants. Typically your lawyer will charge by the hour, but in some cases flat fees can be negotiated for straightforward lease reviews (like form agreements). The average hourly rate charged by attorneys is $250-$500 per hour, but fees can range from $100 to $600 per hour for Manhattan corporate real estate lawyers.
Real estate lawyers should bill in 6 minute increments, but many will round time up (or down) to the nearest tenth of an hour. Multiple people may work on your file (lawyers, paralegals, clerks, secretaries), and the time should be allocated to your bill based on the amount of time each individual worked on the matter. Discounted billable hours can usually be arranged if multiple people work on a matter. If you find yourself being overcharged or billed without a breakdown of the time spent, you should look for a new real estate lawyer.
For commercial tenants, total legal fees for lease transactions are generally between $750 and $2,000 + disbursements .
Legal fees for the transaction of commercial leases are generally charged based on the complexity of the transaction. For example, very basic lease transactions involving standard documentation are usually charged from $750 – $2,500 (+ disbursements) for the transaction. Higher charges apply to complex lease transactions involving extensive negotiations, special clauses, and detailed documents. These complex lease transactions are charged from $2,500 to $10,000 (+ disbursements).
Fees for residential leases vary depending on the experienced and specialty of the lawyer. You can expect to pay between $250 to $800 (+ disbursements) for residential leases.
Many lawyers will offer free consultations to discuss a prospective lease arrangement with you and answer questions. However, the lawyer will not usually read through a client’s documentation without a fee.
You work hard for your money; don’t throw it down the toilet! Seek out a real estate lawyer who will provide a 6-minute billing schedule in order to avoid being overcharged.
Frequently Asked Legal Questions Regarding Lease Agreements
Some of the most common legal issues and disputes that arise in relation to lease agreements are disputes regarding the terms of the lease, whether it has been breached, and evictions.
Disputes Regarding the Terms of the Lease
Somewhat self-explanatory, dispute regarding the terms of a lease are, however, often overlooked prior to entering into a lease. For example, with which parties is the landlord willing to work (or not work) when it comes to an application for a lease, a co-signor, or if a corporate party is the tenant, guarantors? Are the terms of the lease as negotiated still accurately reflected in the written lease document, and within its entirety?
In addition, disputes may arise regarding who owes what in a lease. For example, are maintenance fees owed by the landlord or the tenant? There is nothing worse than having both parties claim that the other is responsible for the same fees. Often, this leads to conflict and may result in a dispute that could lead to litigation.
Similarly, disputes may arise where the definitions, responsibilities, powers, and authorities of both the landlord and tenant are not clear in the lease. Ambiguity of rights and obligations in a lease may lead to disputes over whether a procedure for termination of the lease has been cancelled. Unclear termination rights to the lease may lead to one party maintaining possession of the premises well past the time that such possession ought to have been returned to the landlord.
Disputes Regarding Evictions
Where a tenant breaches a lease – for example, failing to keep up with payments or damaging the premises – the landlord may seek to evict the tenant from the premises. In such situations, a formal eviction complaint may be served on the tenant, to which they may respond within a certain period of time by replying to the complaint and providing a counterclaim.
Where there are issues related to an eviction that the tenant refers to in their response to the complaint, they may seek to postpone the eviction proceedings related to wrongful eviction. It is important to keep in mind, however, that just because a tenant files an eviction complaint does not mean that the court will grant this relief, or indeed that the eviction will be necessary.
Disputes over Breaches of a Lease
The potential for a breach of the terms of a lease does not lie solely with the tenant. In some situations, a landlord may offer a premises with certain expectations or conditions and may later fail to provide these to the tenant. This could include a situation where a landlord fails to make repairs to a premises in a timely fashion, or fails to provide for maintenance or utilities required under the terms of the lease. Similarly, a landlord could sell the premises or fail to notify the tenant of their mutually agreed upon rights and responsibilities in a lease when leasing out the premises to another party after the tenant has vacated, which may lead to disputes.
Nonetheless, once a breach of a lease occurs, either by a tenant or a landlord, the innocent party may file a lawsuit as a means to settle the matter. The innocent party may be able to recover damages by means of monetary compensation, an injunction (order from the court for the other party to act or refrain from acting in a certain way), and/or a declaratory judgment (ruling by the court on a matter that clarifies the legal enforcement of the lease).
These are only a selection of the numerous legal issues that may arise in a day-to-day landlord-tenancy relationship. It is essential to seek legal advice in order to ensure that both parties are agreeing to the rights and obligations they are willing to bear under a lease.
Understanding The Advantages Of Legal Consultation For Lease Agreements
Seeking the consultation of a lawyer regarding a lease agreement is recommended for several important reasons:
Risk Mitigation: A lawyer can identify potential risks that might be included in a lease. For example, many landlords will attempt to shift maintenance costs onto the tenant. Even if these costs are reasonably acceptable to the tenant, it is important to know what they are and that you will be responsible for them. It is also important to know exactly how much a rent increase might be every year so that you are not faced with dramatically increased costs every year that you didn’t realize could occur.
Negotiation: Most landlords will expect a tenant to go through a negotiating process before they will agree to a lease . You want to ensure that this negotiating process is fair and that your interests are protected. If it is not, you need the ability to walk away from the deal without facing great financial hardship. A lawyer can ensure the negotiation process is fair and that your interests are protected.
Compliance: An attorney who has experience with lease agreements in a particular jurisdiction will know if the lease agreement complies with all applicable laws. This is particularly important for commercial leases if the location involves development. It is also important for ensuring that the lease agreement complies with relevant industry regulations.