Sucking More, Not Less: A Modern History of the Office Lease Document
Ever wonder why the office lease is 60+ pages of single spaced madness? The answer is simple. The “selling” of protection from crafty attorneys and incident-driven drafting. With the former, lawyers craft language and sell it to institutional clients as creative mechanisms for protecting landlord value. Over the years, I’ve seen “gotcha language” buried deep in all sorts of poetic BS. Firms have incentive to create these documents because protection sells. In the latter, incident-driven drafting is what happens when a tenant and landlord have a dispute and the landlord says, “…let’s draft language so that never happens again.” As you can imagine, throughout the decades, there have been many disputes and issues between landlords and tenants, greatly adding to the heft of your lease document.
But despite being a terrible read, there’s a lot to pay attention to in a lease document. You see, these documents are created first and foremost to protect the landlord’s interests. That’s not wrong, it’s just a fact. After all, the landlord arguably has more skin in the leasing game than the tenant since they put up the money and took the risk to buy or develop the building.
To be sure, the quality of the lease document is a key determinant in the overall quality of the lease. Getting a great deal on the rental economics is important, but failure to capture the best possible legal outcomes will ultimately reduce the value of the tenant’s lease. In most cases, the letter of intent fails to cover a broad swath of very important details that, when poorly negotiated, can cost tenants dearly. For example, the operating expense and tax provisions, wherein lies a Pandora’s Box of issues. And then there’s what I call flex factors, like the assignment and sublease provision. Getting those wrong can prohibit or reduce a tenant’s ability to exit the lease.
Hiring a competent attorney whom specializes in leasing is the only way for tenants to fully protect themselves. Absent such representation, tenants are often exposed to language that is designed to benefit the landlord. A good lease is not a matter of what’s fair…it’s a matter of what’s negotiated. That’s how you make the lease suck a little less.