Three Issues Brokers Often Overlook When Negotiating Commercial Leases

Having closed hundreds of commercial leases over the years, we have reviewed many Letters of Intent (LOI) from many brokers throughout the tri-state area. We have seen the good, the bad and the ugly. As attorneys, our job is made easier when the brokers hash out all of the business terms in advance and those terms are clearly set forth in a LOI. Below are three issues we often see either omitted or glossed over with “stock language” in a LOI.

  1. Assignment. Perhaps many brokers believe that assignment is a legal issue that should be discussed among the attorneys. In some respects, they are correct. However, some tenants have specific assignment needs that can become dealbreakers if the landlord does not agree. For example, a tenant may be anticipating corporate reorganization, in the near future, and need to stipulate in the lease that a corporate reorganization does not require landlord’s consent provided the principal shareholders do not change. Similarly, a rapidly expanding company with many locations (such as a gym or other retail establishment) may need the flexibility to sell the entire business without landlord’s consent. On the flipside, the landlord may wish to maintain control over the space and ensure that an incoming tenant is fiscally sound, does not violate any noncompete clauses in other tenants’ leases and provides a replacement guaranty. Brokers can help identify some of the issues regarding assignment early in the process and stating them in the LOI can help save the attorneys some time when negotiating the lease. Simply stating “assignment with landlord’s consent” in the LOI does not really provide much guidance.
  2. Renewal Options. Not all renewal options are created equal. All too often the LOI will address the term of the lease, but either omit any renewal options, or include a renewal option without including the term or rent with respect to the renewal option. Simply stating “option to renew” is good but stating “five-year renewal option with 3% annual rent increases” or “at fair market value” is even better. Again, specific business terms help inform the attorneys so they know what to include in the lease. Otherwise the attorneys may need to go back to their clients and the clients, in turn, may need to go back to the brokers to engage in additional negotiations which slows down the lease execution process.
  3. Expansion Options. In some cases, it is appropriate for tenants to request an option to expand into contiguous space or larger space in the same building. Some landlords may agree to a right of first offer but not a right of first refusal. Identifying these issues early in the process and including the precise nature of the option can expedite the lease execution process.

Needless to say, there are many other terms in the LOI including the type of Guaranty, rent commencement date, landlord’s work, tenant’s work, additional rent, exclusive use, and termination options that are often negotiated in the context of a commercial lease. In some cases, it may be appropriate for the parties to seek advice of counsel early in the process to identify and hopefully resolve potential sticking points.


For questions about commercial leasing or general information about our firm, please contact us at (914) 338-8050 or send an e-mail to We look forward to hearing from you.

Betensky Law PLLC
118 N. Bedford Road, Suite 302
Mount Kisco, New York 10549
(914) 338-8050

This is ATTORNEY ADVERTISING. This web site is designed for general information only. The information presented at this site should not be construed to be formal legal advice nor the formation of an attorney/client relationship. Prior results do not guarantee a similar outcome.

Leave a Reply

Your email address will not be published. Required fields are marked *

Contact Us

Give us a call or fill in the form below and we will contact you. We endeavor to answer all inquiries within 24 hours on business days.