Real Estate Law

DENVER, COLORADO LAWYER FOR A COMMERCIAL LEASE.

MY BACKGROUND.

I have been practicing law for more than thirty-five (35) years, I am an Inactive CPA, and I have a 5-Star Rating.I have been involved in helping many landlords to prepare commercial leases and in helping many tenants with reviewing commercial leases.

HOW I WILL HELP YOU.

For landlords, I will prepare a good commercial lease which complies with all of the laws of the State of Colorado, and which is clear, detailed, and not ambiguous. I will prepare a lease which protects you as a landlord.

For tenants, I will review your proposed commercial lease to make sure you are protected.

LEASE PROVISIONS.

In Colorado, the provisions of a commercial lease should include the following topics.

1. The names of the landlord and tenant(s).
2. Address of the premises.
3. Term of the lease.
4. Whether there is an option to renew the lease.
5. Amount of the base rent.
6. Whether there is additional rent above the base rent. This would be insurance, real estate taxes, and CAM (common area maintenance). This concept is known as NNN or triple net rent, See analysis below.
7. Late charges.
8. Payment of utilities.
9. Use of the premises. See analysis below.
10. Amount of the security deposit.
11. Whether there are guarantors and if so, who the guarantors are. See analysis below.
12. Condition of the premises at the start of the lease.
13. Who repairs the premises. The minor repairs are normally made by the tenant and the major repairs made by the landlord.
14. Whether any alterations or improvements are allowed.
15. Permitted entry by landlord. General permission is significantly different compared to an emergency, which requires no notice.
16. Condition of the premises at the end of the lease (should be the same condition as the start of the lease less reasonable wear and tear).
17. Whether the lease may be assigned or the premises sublet. See analysis below.
18. What insurance coverage the tenant will maintain and the amount of insurance coverage. See analysis below.
19. The lease may not be recorded.
20. The lease between landlord and tenant contains the entire agreement between landlord and tenant. No side deals.
21. The address for notices to landlord and tenant and how notice is given.
22. The lease may not be modified unless in writing signed by landlord and tenant.
23. For any dispute between landlord and tenant, the prevailing party receives attorney fees and costs.
24. Neither party waives any rights under the provisions of the lease unless there is a written waiver.
25. The landlord always having keys to the premises.
26. What happens if the premises are damaged?
27. Rights of the landlord upon default and notice to tenant of any default. See the analysis below.
28. Mutual waiver of subrogation rights. This is for insurance purposes.
29. The laws of the State of Colorado apply.
30. The relationship between the parties is strictly landlord and tenant.
31. What signs, including the size and the location, are allowed?
32. Eminent domain.
33. The agreement is the entire agreement between the landlord and tenant- no side deals.

USE OF THE PREMISES.

The use of the premises is critically important to tenants. The use should reflect what the business is for the tenant and should be broad enough to cover potential future uses and related uses. I usually insert “and related uses” to cover the use.

For landlords, the definition of use may also be critically important to make sure a new tenant does not compete with an existing tenant.

NNN (triple net).

NNN (triple net) means that all of the tenants pay their percentage share, based upon the tenant’s square footage rented compared to all square footage, of all of the landlord’s costs and expenses.

The landlord’s costs and expenses include real estate taxes, insurance, and common area maintenance. Common area maintenance is broadly defined.

One important issue for the tenant for NNS is to make sure the tenant’s percentage is based upon the space available for rent and not the space actually rented. The landlord should pay the percentage for any unrented space.

ASSIGNMENT.

Generally, and reasonably, the landlord must approve any assignment in landlord’s sole discretion or if tenant meets certain stringent requirements.

The issue here is if the tenant is an entity and the ownership of the entity changes. For example, the tenant is a limited liability company and the owners change but the limited liability company remains the same.

I cover this issue by stating any transfer of ownership of the tenant over 20% is deemed an assignment.

GUARANTEES.

Another important issue is a personal guarantee for the lease.

It is reasonable that the owner(s) of the entity who is the tenant sign a personal guarantee and most landlords require a personal guarantee.

When I represent tenants, I always advise my client to restrict the personal guarantee to the amount of the rental obligation, base rent, and NNN, plus attorney fees.

Most events will be covered by insurance but if there is an event not covered by insurance, you do not want to be wiped out by signing a personal guarantee. Most lawyers do not address this issue for guarantors but I do.

INSURANCE COVERAGE.

The amount of insurance coverage and the type of insurance coverage is important.

The landlord will reasonably require that the landlord be named as an additional insured for the tenant’s insurance.

DEFAULT.

Default is another critically important part of the lease, for both the landlord and the tenant.

For the landlord, it states what the remedies are if the tenant defaults.

The tenant must always require written notice of any default and a reasonable time to cure the default based upon what the default it, no matter what the default is.

The tenant must receive written notice because the tenant could have no knowledge of the tenant being in default of a provision of the lease.

Landlords often try to state that there should be no notice if rent is late because the tenant should know if the rent was made, which is unacceptable. Again, the tenant must always receive written notice of default and a right to cure. For example, a tenant’s bank could make an error sending rent to the landlord and the tenant would not know about the error except for written notice from the landlord that the rent was not received.

USE OF TEMPLATES FOR LANDLORDS.

When I prepare a lease for landlords, I often prepare a template for my client to use.

The beauty of a template is that for each tenant of my client, my client may tailor the lease to the specific situation for that tenant, such as the name(s) of the tenant, duration of the lease, the amount of the rent, and the mount of the security deposit.

I include all of the important paragraphs that I mention above, and for each lease my client completes the template so that my client does not have to pay me attorney fees to help with each lease. Of course, I am available to answer any and all questions if my client has any questions when completing the template.

CALL ME.

If you are a landlord, or you are a tenant, and you are looking for help with your commercial lease, please call me at 303-782-4900 and we will discuss how best to proceed.