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A letter of intent (LOI), also known as a “term sheet,” sets the stage for a lease. Signed by both the owner and tenant, the LOI indicates that both parties intend to go through with a lease, and includes terms that are fundamentally important to the tenant's operation, such as rent and tenant improvements. And the LOI can affect other parties, such as brokers, who can cause trouble if their services aren’t addressed accurately in the LOI.

By Nathaniel Hoffman, Esq.

At the beginning of negotiations, when you ask yourself the broad question of what rights you can put into the lease to protect yourself if your tenant defaults, “self-help” should come to mind as one of the remedies you can rely on. Most standard commercial leases include a “self-help” right—that is, the right to cure a tenant’s default and collect any attorney’s fees associated with the process—to protect the owner.

Most leases contain an assignment clause that requires tenants to get your consent before they may assign their leases. But some leases contain a loophole that risks giving the tenant too broad a right and being forced later to rent space to a tenant that isn’t appropriate for your shopping center--despite painstaking efforts to create optimal tenant synergy there. If your consent doesn’t include certain conditions, your efforts might be in vain.

If your lease’s assignment clause is like most, it requires the tenant to get your written consent before it may assign its lease. But unless that consent includes certain conditions, you risk giving the tenant too broad a right and being forced later to rent space to a tenant that isn’t appropriate for your office building, despite the fact that you’ve spent time vetting other tenants to create the right mix at the property. You can avoid this pitfall by clearly specifying the conditions under which you’ll agree to the assignment.

If you’re not careful when drafting your lease with a tenant that wants to customize its space with a large-scale installation, you could be left footing the bill for removing it after the tenant moves out. But there is a leasing strategy you can use to make your space more marketable and lower your costs when the tenant moves out. And because the strategy has benefits for the tenant, too, unlike with some of your other requests during lease negotiations, you probably won’t have to deal with pushback.

As mixed-use commercial properties have become prolific over the last few years, office building owners have had to get used to the idea of leasing space to retail tenants in buildings that traditionally might’ve been used strictly as office space.

Despite an uptick in the commercial real estate market, many owners are still trying to fill vacant space. There isn’t an endless supply of big-box tenants to fill large vacant space, so when previously reliable chains like Blockbuster and Circuit City began moving out of their spaces, many shopping center owners were left with spaces designed to accommodate expansive businesses—but no similar-sized tenants to replace them.

If you own a shopping center or office building long enough, an accident involving a shopper or visitor to the property will inevitably happen. Accidents can be a nightmare for owners: In the best-case scenario, you’ll have to deal with a situation that forces you to spend time consulting with your attorney and worrying about a lawsuit that never happens. In the worst-case scenario, you’ll end up defending yourself from a negligence lawsuit. You can avoid liability for accidents to a large degree—if you plan ahead.

If you’re like many shopping center owners, the leases with your tenants include “percentage rent” provisions that require them to pay you a percentage of their gross sales. As long as gross sales are high, you’ll benefit from a percentage rent arrangement. If a tenant’s competitor in a nearby shopping center draws business away from the tenant and your center, your percentage rent could decrease. And to some degree that’s unavoidable.