Landlord’s draft lease would hit tenant with a real estate tax increase the day they moved in
Recently, a Manhattan landlord drafted a lease which was passed on to the tenant without comment by a large landlord broker supposedly representing the tenant. The draft lease would have increased base rent by hitting the tenant with a tax increase the day they moved in!
The landlord's draft lease broadly defined real estate taxes to include much more than the customary charges. Fortunately, Commercial Tenant Real Estate Representation Ltd. was consulted, and we thoroughly marked up the lease. We recommended one change which would avoid the initial real estate tax increases. We recommended creating appropriate exclusions from real estate taxes to protect the tenant from improper charges. Our recommendations were accepted.
A landlord broker or attorney simply will not pick apart a landlord’s draft lease, because a reputation for doing so would undermine their ability to compete for lucrative landlord business. In-house corporate attorneys can’t be counted on to spot all the lease traps since many involve business issues beyond their expertise.
Many corporate executives seem to think they need a big landlord broker because such a broker will know about all the space there is in a market. The assumption here is that tenants sign bad leases because they somehow overlook a great space. But landlords are naturally eager to lease their space, so they let every broker in town know about what they have available. It’s very rare that a broker will show a space that nobody else in the business has heard about.
Tenants sign bad leases because of the way they are negotiated. They work with a landlord broker or an attorney who represents landlords, and these people push a landlord’s so-called "standard" lease loaded with traps for tenants.