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Commercial Leasing

Case Study | Mar 18, 2015

The Problem

Our client, a dentist negotiating a lease with a Landlord for new commercial premises within a local shopping mall, was concerned about the potential additional rental costs he could incur pursuant to the terms of the Landlord’s standard-form, 75-page lease. He also hoped to have his son join him in the business before the end of the five-year term, and wanted to be sure that nothing in the Lease would prevent him from doing so.

Our Approach

Our client would be leasing one of the shopping mall’s larger units. Since the Landlord considered him to be one of its “anchor tenants,” our client had some bargaining strength. After an extensive review of the standard form of lease, we recommended changes and explained the terms to our client, who identified those areas he wished to change and those he could accept. We negotiated a resolution of these issues with the Landlord’s lawyers, focusing primarily on our client’s assignment rights and limitations and qualifications on the additional rental items he could be charged, as well as amendments to the default provisions and Landlord’s rights.

The Result

The majority of our client’s required changes were accepted. He was permitted to assign his lease in full or in part to his son or another third party purchaser, provided that the new owner signed an assumption of the lease. Moreover, upon such assignment, if he sold his business outright, he would be released from his obligations under the lease. We were also able to reduce significantly and then cap the operating costs that could be charged to our client, and limit his repair obligations, increasing the Landlord’s obligations. Our client gained a lease that he fully understood, with negotiated limitations on clauses that had previously significantly favoured the Landlord. Later, when the Landlord tried to charge all of the tenants in the shopping mall for a roof repair to the common concourse area in the mall, our client was not required to share the costs, because of the changes we had negotiated to his lease. Other tenants were not so fortunate.

© 2015 Lawrence, Lawrence, Stevenson LLP

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