Brian Madigan LL.B., Broker
BRMadigan@iSourceRealEstate.com

RE/MAX West Realty Inc.,
Brokerage
Independently owned and operated

96 Rexdale Blvd. 
Toronto, Ontario 


Phone: 416-745-2300
Toll Free: 1-888-507-0817

 

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Commercial Lease ~ Drafting the Offer (Part 1)

August 19, 2013 - Updated: August 19, 2013

 

 

Question:

 

On an Agreement to Lease, when it is a Net Lease + TMI - does the amount of the TMI get included in the Agreement to Lease or only on the Lease (what about escalation, only on Lease?)

 

Also, the book suggests to include the Lease as a schedule on the Agreement to Lease - does each page need to be marked/identified as a schedule and initialled by both parties.

 

Thanks

 

Arnie

 

Answer:

 

The TMI and every other significant business term should be included in the Offer.

 

The Offer will usually say that the Tenant will sign the Landlord’s standard form Lease. So, the Offer (Agreement to Lease) is the only time you really get to negotiate.

 

You should ask for and review the Landlord’s standard form ahead of time. Then, if there are any changes, they should be specified in the Offer.

 

Make sure any free rent period is in addition to the rental term. This way, you get paid for the entire rental term. For example, 4 months free rent on a 5 year rental; this lease will then run for 64 months, 4 months free at the beginning, followed by 60 months and you are paid on the 60 months to follow.

 

Many commercial landlords will have their own standard Offers. You will have to compare that to the OREA FORM, if you are using that as a guide. You need to have something as a base document.

 

It will be difficult to have a commercial landlord initial each page. I see that it is suggested as a best practice; the problem is that you will not likely have any co-operation from the landlords.

 

This doesn’t mean that you can overlook compliance. If you changed something in your Offer, make sure that change is reflected in the formal lease.

 

In addition, it is generally wise to recommend that the client have the Landlord’s form reviewed by their own lawyer.

 

Brian Madigan LL.B., Broker

www.iSourceRealEstate.com


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Brian Madigan LL.B. Broker

RE/MAX West Realty Inc. Brokerage

Independently owned and operated

96 Rexdale Blvd. , Toronto Ontario,

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