Need to Amend your Commercial Real Estate Lease?

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We will work with you and your team to evaluate your situation and make sure that you consistently receive a high quality work product at a reasonable rate.

Common issues covered in commercial lease amendments:

1. Lease term extension
2. Rent payment terms (deferment, abatement, method of computation, etc.)
3. Size of the leased premises
4. Improvements to the leased premises
5. State mandated disclosures

Why Work with Us?

• Our attorneys genuinely care about helping clients achieve their goals and enjoy building long-term relationships.
• Each commercial lease amendment is prepared and reviewed by at least one of our commercial transactional attorneys.
• Our transactional attorneys are dedicated commercial real estate transactional attorneys, who take pride in their craft.  
• We have experience representing commercial landlords with lease portfolios spanning across the country, and Fortune 500 companies.
• Our transactional attorneys have gained world-class training while practicing at major “BigLaw” firms.
• We aim for consistency and best-in-class professionalism and performance. As a result, our attorneys are frequently retained by other prestigious law firms for multiple projects.

We help commercial landlords prepare tailored lease amendments to handle the changes that life throws at us.

The proposal of any amendment to a lease provides an opportunity for each party to re-evaluate the terms and provisions of the lease as well as revisit any provisions that have been troublesome or overlooked.  If circumstances have changed in such a way as to give one party more leverage, the execution of an amendment may be used as an opportunity to improve that party’s position under the lease.

Update: As the coronavirus pandemic continues, certain commercial tenants may be tempted to cite contract clauses in the lease or common law doctrines that they believe (or hope) will excuse them from paying rent, such as a claim of uninhabitability, frustration of purpose, impossibility, lack of quiet enjoyment, the interruption of landlord services, or co-tenancy provisions where tenants in shopping centers are excused from performance obligations if other specified stores close. But the effectiveness of these arguments is hard to predict. Oftentimes, the best solution is a mutually agreed upon modification of a few basic terms, whether in the form of rent deferment, or rent abatement, lease extension, or a combination of modifications.

One Size Doesn’t Fit All

Each lease situation is unique. It is advisable to carefully review your lease, consider possible changes, and address the ones you choose.

Many lease amendments serve to: (1) confirm basic terms of the original lease (e.g., the rent commencement date); (2) reflect a change in circumstances (e.g., a relocation of the leased premises, the exercise of an option to expand or contract the leased premises); and/or (3) memorialize the terms pursuant to which the tenant has exercised an option to extend the lease term.

Additional Changes

It is not uncommon for forward-thinking tenants to revisit and broaden the assignment and subletting provisions and the use provisions in order to gain flexibility in dealing with future economic conditions.

It serves the landlord well to include estoppel type language in the amendment and to have a tenant certify that there are no landlord defaults under the lease and to waive any prior claims.

The parties should keep in mind that proposing additional changes to a lease can invite the other party to do the same, which is almost guaranteed to increase the cost and time required to finalize the originally intended lease amendment.

COVID Relief Provisions to Consider

Businesses everywhere are hurting, especially small businesses impacted by the pandemic. Landlords who can afford to work with their tenants might wisely conclude that it’s worth it to compromise, if doing so enables the tenant to survive the crisis and, hopefully, re-open once the situation has improved. The alternative—declaring a default—simply empties the space (if permitted under applicable law). Finding a new tenant might ultimately be more hassle and riskier than negotiating with an otherwise steady tenant.

Rent Relief

Lowering the rent for a defined period of time is one of the most common changes that landlords and tenants will make in response to the pandemic. Be sure to describe:

• Whether the rent will go down to a specified dollar amount or by a percent.
• Whether the landlord is forgiving the rent or postponing it.
• If and when the original rent will be reinstated.
• If the rent has been postponed, at what point the unpaid rent will be paid back, and whether the tenant will owe interest.
• If the rent has been conditionally forgiven or abated, what are the conditions that the tenant must satisfy and how much time will the tenant have to cure any defaults before the abatement is lost.

Landlords should consider extending the term of the lease to cover any abated / forgiven rent, or specifying that once the rent resumes, it will increase by an amount that will cover the abated amount.  During amendment negotiations, Landlords should also take the opportunity to confirm and, if necessary, clarify whether any options to extend the term still exist to avoid potential disputes down the road.

Size of the Premises

If the tenant leases on a square foot basis, and is closed or has limited its operations, it might not need all of the space it’s leasing. The parties may mutually agree to decrease the area being leased, which will decrease the rent.

Security Deposit

Normally, landlords apply the deposit to cover delinquent rent. However, landlords and tenants might agree that the landlord will use the deposit to cover unpaid rent right away.

Relax the Restrictions on the Use of the Space

These days, tenants may need to expand the services or products offered or otherwise modify the use of the leased premises.  Landlords should carefully draft the modifications to avoid overly broad changes that may come back to haunt the landlord. Landlords in multi-tenant properties where use and exclusive clauses are held by other tenants must also carefully harmonize any changes to use provisions.

Utilities

Utilities clauses address how costs are metered and apportioned. A tenant that is closed and dark might reasonably ask to be absolved (or partially absolved) from its contributions towards utility bills.

Parking

If a tenant is paying additional parking charges in connection with its premises, the parties may consider modifying the charges or dropping them during a period when the tenant’s business is closed or its operating hours are reduced.

Maintenance

Many leases involving multi-tenant property contain provisions governing common area maintenance (“CAM”) charges that the tenant must pay in addition to monthly base rent.  How to fairly reallocate these charges can be a negotiation point. Amending the landlord’s duty to provide extensive HVAC services or extended hours of lighting might also be reasonable, especially if operating hours are significantly reduced.

Longer Cure Periods

The parties to a lease may wish to consider extending the “cure” period(s) with regards to defaults under the lease.

Additional Parties Involved

Landlord’s Lender

If a subordination, non-disturbance and attornment agreement (SNDA) was executed in connection with the lease, or if SNDA language has been included in the lease, it is possible that the consent of the landlord’s lender must be obtained for any amendment or modification of the lease. It is prudent to obtain this consent so it is clear that the SNDA will continue to apply to the lease, as amended.

Lease Guarantor

If there is a guarantor under the lease, the landlord will typically want the guarantor to ratify and affirm the terms of the guaranty in the event of an extension of the lease or material amendment to the terms of the lease.