COMMERCIAL LEASE CHECKLIST: IMPORTANT ACTION ITEMS AFTER
THE LEASE HAS BEEN SIGNED

1. Welcome package.

      Purpose: A friendly greeting for the new tenant and verification of important lease information.

2. Abstract/Summary of Lease.

      Purpose: Create a one-time comprehensive review of the lease at the time of execution.

      Practice Tips:

      a. The person preparing the summary should be trained to read the entire lease and look for all clauses that create specific rights for the tenant or any obligations on the   landlord.

      b. If sections were deleted from the standard lease it should be noted here. For example, if the “right to relocate” clause was deleted or if the landlord agreed to drop the security agreement.

      c. Look for odd inserts, such as a covenant that the name of the Center cannot be changed without the tenant’s approval.

      d. Lenders will usually prepare a lease review summary as part of the loan approval. Make sure your client gets a copy of the review and uses it as part of its lease summary.

      e. Be sure to review the Estoppel/SNDA documents from the purchase as those will usually disclose tenant specific issues.

      f. Capture the necessary information for the management company’s program as well as information for a future SNDA/ Estoppel document.

3. Turnover of possession.

      Purpose: Create a procedure to complete the landlord’s approvals and deliver the keys.

      Practice Tip: Before a tenant gets the keys, the landlord must give the tenant a guide to complete the process. Remember, the tenant is generally clueless on what needs to be done.

4. Memo of Landlord required work/verification of completion.

      Purpose: Help the Landlord ensure that all of its tenant improvement obligations are timely met.

      Practice Tips:

      a. Landlord should prepare a memorandum of all work that it is obligated to perform, even in simple situations. It should assign responsibilities to specific personnel and provide for a check system to ensure completion.

      b. It is critical to add all deadlines as hard dates.

      c. If any work is contingent upon a tenant submission, that should be noted and communicated to the tenant.

      d. Often times, after a Lease is signed the parties learn that delays are necessary due to unforeseen issues. The landlord must get written extensions to avoid a delay claim later.

5. Contractor Acknowledgement Release.

      Purpose: Have the contractor agree that its work is through a tenant, not the landlord.

      Practice Tips:

      a. Texas law is clear that any lien rights can only attach to the property rights of the person who signs the contract with the contractor.

      b. Nothing keeps a contractor from claiming that it was actually working for the
landlord.

      c. Nothing keeps a creative lawyer from finding some language in the lease that
implicates the landlord in some arguable manner that it “authorized” the work, therefore hired the contractor.

6. Release of Tenant Improvement (“TI”) money, receipt.

      Purpose: Document the completion of the TI work and the delivery of the funds.

      Practice Tips:

      a. Lenders and buyers will often want verification that the TI money has been paid and that tenant has no claim to any additional TI money.

      b. The written verification should include additional representations regarding the completion of the work, in case anything arises later.

7. Completion of TI Affidavit/ Lien Release.

      Purpose: Document the contractor’s payment and release.

      Practice Tip: This will create a direct indemnity from the contractor if any claims are filed later.

8. Acceptance of Premises.

      Purpose: Document the final step of turn over to the tenant.

      Practice Tips:

      a. This will document that landlord has completed all TI work obligations.

      b. If the lease has any contingencies [i.e. termination rights], add a recital that the contingency was waived.

9. Receipt of broker payment/ release of claim.

      Purpose: Document the broker payment and confirm whether any future commissions are due on renewals.

      Practice Tip: Landlord needs to make sure they disclose any commission obligations as part of any sale.

10. Confirmation of Terms.

      Purpose: Verify the essential terms and convert any unknown dates to hard dates.

      Practice Tip: How many times have you been asked to review a lease and found that the rent start date was the “earlier of a and b, but not later than the occurrence of x?”

11. Annual review/audit of file.

      Purpose: Create a procedure to ensure that the property manager regularly updates the lease file.

      Practice Tips:

      a. This will help in completing estoppel certificates for a sale or loan. Be sure to include any additional items that could help in a sale/refinance. For example, making sure that the certificate of occupancy is in the file.

      b. Be sure that the insurance certificate is current.

12. “Concession” Letters.

      Practice Tip: Document simple, temporary agreements that don’t justify a Lease Amendment.

13. Amendments.

      Practice Tip: Label the Amendments first, second, third, etc. It helps in the filing.

This Commercial Lease Checklist was Prepared by Scott M. Noel (snoel@mccathernlaw.com) and Gregory A. Kline (gkline@mccathernlaw.com), partners with McCathern Mooty Grinke, LLP, with contributions from Kevin Kerr, an independent attorney. For more information about the Firm, please visit the website at www.mccathernlaw.com or email Scott or Greg.

Commercial Lease Checklist: Important Action Items After The Lease Has Been Signed