Tuesday, February 19, 2008

Sublease and Assignment

When preplanning for offering excess space in the subleasing or secondary space market, tenants should make certain appropriate language is reflected in their leases.


from Negotiating and Drafting Office Leases, Law Journal Press


Tenants should consider carefully the following issues:


(1) Ability to market and offer space with a minimum of lead time, pricing limitations and other regulation by the landlord;


(2) Ability to eliminate the need for landlord's consent in instances such as subleasing to affiliate or related entities, and assure consent quickly when the landlord's consent is required;


(3) Ability to trigger consent through intentions rather than formal
offers or fully executed sublease documents;


(4) Ability to offer space through commercial channels of tenant's choice, through brokerage firms, by advertising and using inter-company agreements, without landlord's interference of limitations;


(5) Ability to demise, later and install fixtures in the space without inappropriate limitations, roadblocks, or delayed landlord consents;


(6) Ability to preclude landlord limitations on or added criterion for pricing or marketing the space;


(7) Absence of limitations on type of use or type of subtenant for the space;


(8) Ability to preclude artificial limitations on the extent and duration of landlord's recapture rights;


(9) Right to recoup all installation and subleasing related costs before landlord's profit-sharing rights kick in;


(10) Ability to reoccupy the space and collapse the sublease in the event of economic cycle recovery without the landlord's consent or further economic sharing with the landlord;


(11) Ability to maximize the subleasing target market by providing for
an increase in the tenant's security under the direct lease to offset or alleviate any landlord concerns about the creditworthiness of the tenant's proposed subtenant; and


(12) Ability of the subtenant to further remarket and sublet the
space." for more information see ; www.houstonrealtyadvisors.com or www.Houstonrealtyadvisors.net