Advanced Leasing Strategies: The Fight over Compliance with Laws – It’s not that bad

One mention of “compliance with laws” and your eyes glaze over, right? “Time to bring in the lawyers to hash it out,” is often heard.

Here are few tips to impress your friends (and hopefully, your clients):

• Landlord’s View: Surprise, Landlords generally do not have a problem causing their building to comply with laws (including, dare I say it, ADA), but they don’t want to fix everything that is non-compliant. Why would they if no one is enforcing it?  Face it, you’ve done work in your backyard without a permit, right? No harm, no foul.
• Tenant’s View: Tenants naturally want to make sure that they can conduct their business in the space and that it’s safe to access it.
• Simple Solution:
  • Landlord agrees to deliver the Premises to Tenant in compliance with laws to the extent required to allow legal occupancy. Beyond this, it’s Tenant’s obligation to keep the Premises compliant.
  • Landlord agrees to pay for non-compliance issues (ADA) in the Common Area to the extent necessary for Tenant to use the Premises for general office use, and for reasonably safe access to and from the Premises by its employees and customers.
  • Tenant agrees to pay for non-compliance issues (ADA) in the Common Area to the extent triggered by Tenant’s improvements or a particular use of the Premises other than for general office use.
  • Landlord agrees to bear these costs as part of its delivery obligation (and there may be a 12-month warranty tied to it). Thereafter, compliance costs would be included in CAMs.

Next time your clients are arguing over compliance language, consider using these points to align their views. Or better yet, include some of these points in your next LOI. It’s not a zero-sum question. Both parties can win if their pain points are adequately addressed.

Derek A. Ridgway is a seasoned commercial real estate attorney with more than 25 years of experience.  He is a Partner in Rimon’s San Francisco and Menlo Park offices. His clients look to him for advice in all aspects of real estate, leasing, business and construction transactions. Read more about Derek.

Rimon has 47 offices across five continents. The firm is widely known as being at the vanguard of legal innovation. The firm has been repeatedly recognized by the Financial Times as one of North America’s most innovative law firms. The firm’s Managing Partners were both named ‘Legal Rebels’ by the American Bar Association’s ABA Journal and have spoken on innovations in the practice of law at Harvard and Stanford Law Schools. Rimon and its lawyers have also received numerous awards for excellence, including from Best Lawyers and Chambers.