As an attorney at Bonardi & Uzdavinis LLP I am constantly asked what the best tips are for lease negotiation when clients feel overwhelmed with dates, notices, and caveats. After taking a deep breathe, I admit to something simple. The deadlines are more likely than bad economics to stymie good operators. Start by focusing on time if you want to learn how to negotiate a lease that keeps your money in your pocket. Calendars. Reminders. The dull stuff.
What are the deadlines I should be tracking from the beginning?
Start by removing the lease. Don’t skim. This is an actual review that becomes a working tool.
- Create a lease checklist that includes information about the lease renewal window, the notice period for termination of the lease, notices to extend, notices not renewing, and notices regarding sublease assignment.
- Note down important dates, such as the deadline for OPEX reconciliation, CPI notification timing and letter-of-Credit renewal.
- Add operational items, such as dates of insurance COI compliance and return of security deposits timelines.
- Track important lease dates in your lease management program. If software feels too heavy, a spreadsheet can be a great alternative.
My short tips for lease negotiation setup are simple. Your system is the best.
How do auto-renewals work and why do they bite?
A clause that renews the contract automatically can turn silence into another term. This may sound innocent, until market rents fall or you alter your footprint.
- Verify the exact date, time and method of notice for the lease renewal.
- You can ask for a cushion. Ask your landlord for a notice or another method of notification.
- You should not rely on the “then-current market” for automatic renewals. Instead, you should use a specific procedure and tie it to a price that is affordable.
- Include tips in your lease negotiations. For example, if you get notices by mail, give yourself a grace period.
Florida or not, Florida courts interpret notice provisions according to their written form. You may be surprised to find that they are not written as you expected.
What mechanics can protect me from a mess if I don’t pay attention?
Deals have fallen through because the wrong announcement was sent. This sounds ridiculous. It is not true.
- You can lock down clauses that restrict how you receive notifications. List the attention lines. Titles. Backup recipients.
- Specify the delivery methods that are permitted by your lease. Use certified mail and an email for critical events as a courtesy.
- You can enter the time that is built into your calendar. If a notification becomes effective after three days, add the days to every reminder.
- Follow the steps below to correct a lease default, even if tempers flare.
The paperwork is boring. One of my top tips for avoiding expensive lease disputes is to pay attention to the details.
What about renewals, options and the right to first refusal?
When the markets are volatile, options allow you to keep your leverage. Options can be a trap when you miss a deadline by merely one week.
- You can track your renewal option with two reminders and a human back-up.
- Define clearly the time for an notice of right to first refusal. Are these business days? Calendar days. Weekends: How are they charged?
- If you need landlord approval for alterations or signage, be sure to specify in the lease what will happen if it is not granted.
I have options to choose from. The words are easy to read so that people don’t have to call me after nine in the evening to understand them.
How can I manage OPEX effectively and CPI without losing direction?
Leakages in operating expenses take time to show up. You may only notice leaks after a year or so.
- Cap controllable expenses. Capital not related to the premises may be excluded.
- Set deadlines to meet for notices of audit rights and tie increases.
- Select the CPI index and month. Also, select the floor, cap, and ceiling. Calculate the CPI by calculating the CPI notice dates.
- All passes through should be kept in one place. Do not wait until the end of the calendar year to reconcile them.
This is the part that I repeat most in my tips on lease negotiation. Precision will pay off later.
How can I prevent end-of-term surprise?
The end comes as a surprise. Then, holdover penalties become a reality.
- Start a “winding down” file six months before expiration. Include the surrendering of equipment and giving good notice, as well as vendors and decommissioning requirements.
- Check with the landlord to see what kind of certification they require.
- Confirm the cleaning of all keys, access cards, data closets, and practical handoffs.
- Instead of gambling, negotiate a rate for holding over your money.
I’ve been in spaces that are perfect for tenants but not for landlords. The money is in the space.
Can I make do with a simple Excel spreadsheet?
Both work. Both work.
- If you manage a large portfolio, then you will need to use a software package that has roles, escalations, and audit logs.
- A simple tracker and calendar will suffice if you only have a few websites.
- Create a SOP explaining the best practices in lease calendaring. It does not have to be fancy. When, who and how do you update it?
It is not glamorous. It’s not glamorous. My favourite tip when it comes to negotiating a lease is this.
When should I consult a lawyer and when can I handle the situation myself?
If a notice involves money, options, or defaults, it is best to consult an attorney. Your operations team can deal with certificates and vendor access. Bonardi & Uzdavinis LLP is able to help with the wording of renewal options, cure letters, ROFR timing, and other issues which may be litigated. Nobody wants to learn commas from a judge.
Checklist for Lawyers before sending a message
- Please check the correct names and addresses of all parties.
- Calculating lease notices
- Date math for lease renewal window confirmed
- Attachments, signatures and proof of delivery can be arranged.
- Calendar follow-ups for responses, landlord consent timeliness or cure period
These are quiet movements. You can avoid loud problems by using these quiet movements.
The key Takeaways
- The time period of the contract is essential. Prioritize the calendars in real lease negotiation tips.
- Write your notices like you’re expecting the worst day in the year.
- Only if you’re on time can you use audits and options.
- Plan early to finish strong. Plan early to avoid penalties for holding over.
- Simple tools plus steady habits outperform big promises.
The FAQ
What is the most common missed deadline in commercial leases? The notice of renewal. Second place goes to the deadlines for OPEX reconciliation and notice of non-renewal at the end of each year.
If the lease says so, then you can. Most of the time, you can send the email version with certified mail as a backup.
Q3: What should I do to prepare for my expiration?
Minimum of six months. Set a timetable for vendors, security personnel, movers, and surrender.
Q4: What if my landlord won’t give his consent?
Defining the deadlines for landlord approval and the remedy if the lease is silent. If the lease is silent, send a follow-up note. Consider consulting an attorney, if needed.
Q5: Which software is required to stay compliant?
Not always. A simple tracker with repeating reminders can handle lease calendaring. Software is typically pushed by portfolio scale.
Bonardi & Uzdavinis will help you develop a calm, organized plan instead of a panic-driven calendar. We will adjust your tracker and review your notifications. We will also revise clauses that keep you up at night. The boring parts protect you. It’s easy to make it.
This post was written by a professional at Bonardi & Uzdavinis, LLP. Bonardi & Uzdavinis, LLP is a boutique, full service law firm providing its clients with a wide range of representation. Our primary areas of practice include real estate attorney largo fl, probate, personal injury, construction, and commercial litigation. If you are looking for a real estate attorney or personal injury attorney in Tampa Bay contact us today for a case evaluation today!