Offer To Lease Versus Lease Agreement

By Bruce Firestone | Uncategorized

Jan 20

I was recently asked this question by a client: is a short form commercial offer to lease adequate as a lease agreement or does he need to hire a lawyer to prepare a full lease agreement?

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Here is my answer:

Ha!
Good question, Chuck.

I
put in all your offers to lease this paragraph:

Lease    

This Offer to Lease shall be deemed valid and fully
binding, and shall represent the lease between the parties.

I personally detest having to use a lawyer to create a 35 to 65-page (8.5″ x 14″) lease that: a) no one
ever really reads and b) no one ever really pays attention to.

When
I was a developer, I used a 4-page offer to lease/lease agreement to sign up
clients from small to large. I did a 90,000 sq ft lease with Nortel using that
4-page lease. They were happy to use it too. In fact, I think it was their
idea.

Remember, this was at a time when you sent 65-page documents to a typing pool, which alone could take weeks to prepare. Instead, our company bought tiny computers from a company no one had heard of (Apple) called Macintoshes. 

We not only had our 4-page lease forms on those computers, we had our floor plans too (the Mac was graphics-friendly even in 1983).

Therefore, our leasing folks could sit down with a client, determine their needs, enter the data in pre-prepared fields, red line a floor plan, and print it out on a Mac-compatible printer and get it signed in no time. By the way, we even networked those Macs so we could have a primitive intranet where, say, a salesperson could share an offer to lease/lease with accounting and management. Unfortunately, we couldn’t share them outside our office–we had bike couriers and fax machines and snail mail for that 🙁

As
a result, Terrace Investment Limited (the first parent company of the NHL’s Ottawa Senators and, at that time, owners of a considerable commercial office, retail and industrial portfolio) could sign up clients in a couple of hours as opposed to what would take our competitors weeks or months to do: 1. negotiate an offer to lease, 2. have the offer to lease printed out by a typing pool, 3.

then
meet again with the tenant to get it signed by them,

 4. afterwards, get a lease prepared by the landlord’s lawyer (at considerable cost) and yet more time for the typing pool to type the damn thing out on word processors, 5. get the tenant’s own lawyer to
review it (at an additional and considerable cost), 6. having to effectively re-negotiate the
deal because one or both lawyers tried to “sweeten” the deal for their clients thus “proving” their value to their clients, 6. resulting in ensuing unconscionable and frustrating delays.

Furthermore,
if there is ever a dispute between tenant and landlord, if you have a short form summary offer to lease, the judge will use his or her best judgment to resolve matters,
which IMHO is way better than the alternative. The alternative is that the
judge has to wade through 35 to 65 pages of legalese because, if it’s drawn up
by lawyers, he or she assumes that it will have thought of everything, which as
you know

already is impossible.

Sorry
for the long-winded response but this is my advice.

Best,
Bruce

Bruce M Firestone, PhD

Ottawa Senators founder

Century 21 Explorer Realty Inc broker

Real Estate Investment coach

making impossible possible 

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