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Leases are the contractual basis for rental income and the value of commercial property. Lease review should confirm that rental terms and expense allocations are consistent with the purchaser’s economic underwriting of the property and the seller’s rent roll and operating statements.
Counsel should also confirm that all leases and amendments are properly executed and assignable to the purchaser and that any required assignment documents are properly executed by the seller and tenant. Tenant estoppels should be consistent with the leases and address other matters not adequately covered in the leases.
Counsel must identify and interpret various lease provisions regarding obligations of the landlord and tenant that may affect the continued viability of a lease and operation of the property. These include buildout and other obligations of the landlord which the purchaser will assume, purchase options or rights of first refusal, termination rights, “go dark” provisions, tenant expansion rights, co-tenancy provisions, use and noncompete restrictions.
Counsel must also review any SNDA provisions contained in the leases and understand how these provisions (or their omission) will be viewed by lenders.
Listen as our authoritative panel discusses best practices for lease due diligence with regard to both property economics and legal concerns, and provides a detailed analysis of the foregoing lease provisions. In addition, the panel will discuss the points which should be addressed in the tenant estoppel, and how a tenant estoppel can be used to confirm terms or facts which may be unclear in the lease itself.
Key topics include:
CLE credit available.