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Welcome to
A.I.R.* Forms Practitioner!

AIR forms are excellent contracts!  They typically speed up the closing of a deal and lower transactions costs. Parties signing AIR forms sometimes have a limited understanding of the terms of those contracts.  Some obtain unjustified comfort in signing a document they do not understand because it is a “standard-form” document that is widely accepted in the industry.

This site intends to increase the understanding of AIR forms, and explain legal aspects of:

  1. leasing transactions;
  2. purchase/sale transactions; and
  3. landlord-tenant disputes (including commercial unlawful detainer).

*A.I.R. Forms Practitioner is not affiliated with or sponsored by the AIR CRE.

Popular Articles & Resources

New Single-User Restroom Law – Is Lessee Responsible To Comply?

By | February 23rd, 2017|Leasing|2 Comments

Effective March 1, 2017, California businesses with a single-user restroom must identify such restrooms with signage as “all-gender” restrooms.  Under the AIR lease, is it Lessee’s responsibility to comply with this new law, and is Lessee responsible for the cost to comply? Yes, according to many Lessors.  Lessors are contending that, pursuant to Paragraph 6.3 of the AIR Lease, it is Lessees’ responsibility to comply and Lessees are responsible for the cost.  An excerpt of Paragraph 6.3 is below.  Please note that the term “Applicable Requirements” below includes applicable law (such as this new California law). Lessees may not be aware of this new law.  [...]

AIR Updates Leases For 2017 Disability Access Law

By | January 4th, 2017|Leasing|0 Comments

The AIR Commercial Real Estate Association has updated its lease forms to account for a new California disability access law effective January 1, 2017.  The new law was approved by Governor Jerry Brown on September 16, 2016. As the new year begins and you get ready to close deals, make sure you update your AIR forms.  You may update them at the AIR’s website here.  The advantages of the AIR’s industry-leading lease forms are summarized here. The following is a summary of certain key provisions of the new law (Civil Code section 1938): Lessor’s Disclosure Requirement: Lessors must state on every lease executed on or [...]

3 Tips To Evict Tenants Quickly

By | August 29th, 2016|Landlord-Tenant|0 Comments

If the most frustrating event for an owner of commercial property is a tenant not paying rent, the second most frustrating event must be a delay in evicting that tenant. If the lease at issue is an AIR lease, here are three tips to facilitate a quick eviction: 1. Careful Preparation of the 3-day Notice: The 3-day notice must be carefully prepared.  If it is not, the landlord may have to start the process over, or the landlord may lose an unlawful detainer case.  Although California law gives a tenant 3 calendar days to pay the amount demanded in the notice to pay rent, Paragraph [...]

Lessor’s Rights When Lessee Breaches the AIR Lease

By | April 12th, 2016|Landlord-Tenant|0 Comments

If Lessee does not perform an obligation in the AIR Lease, Lessee typically has the right to cure its Default.  However, if it fails to cure on time (or if the Default cannot be cured), Lessor may terminate Lessee’s right to possession of the Premises and require Lessee to pay Lessor all of the following 9 items: Brokerage commissions applicable to the unexpired term of the Lease. Rental loss for the period of time prior to termination of Lessee’s right to possession. Rental loss for the remainder of the lease term (however, Lessor must attempt to promptly lease the Premises to another party). Free rent [...]

Modifications to the AIR Purchase Agreement (Part 3)

By | February 4th, 2016|Purchases/Sales|2 Comments

After you sell a property, do you want to ensure that the buyer does not make a claim against you?  Part 3 of this series discusses the most effective modifications Sellers make to the AIR purchase agreement to avoid (or limit) post-Closing claims by Buyers. “Cap” on Liability: Many custom purchase agreements will include a “cap” on the maximum amount of liability in the event that Buyer sues Seller after the Closing. This “cap” can limit Seller’s liability for claims Buyer may make against Seller (for breach of a Seller representation, etc). Some Sellers that use the AIR purchase agreement add a similar “cap” on [...]

Think Twice Before You Click “Send” – AIR Allows Notices By E-mail

By | December 15th, 2015|Leasing, Purchases/Sales|0 Comments

Could a quick e-mail from a Buyer’s broker to a Seller’s broker stating “Buyer finds the environmental report unacceptable” accidentally terminate a purchase and sale agreement? Could an e-mail from a tenant's broker to a landlord's broker stating "tenant is going to exercise the option” be an unintentional exercise of an AIR option to extend a lease? The answer to both questions is yes – now that AIR leases and AIR purchase agreements (and many lawyer-drafted real estate contracts) have recently been revised to allow notices to be sent by e-mail. Attorney-drafted real estate contracts increasingly allow parties to send notices by e-mail. The AIR [...]

AIR Option – 2 Key Provisions You Should Know

By | November 11th, 2015|Leasing|6 Comments

The AIR Option To Extend Addendum is frequently an afterthought when completing AIR lease documents. This Addendum is a well-drafted form and relatively straight-forward. Nevertheless, there are at least two key provisions that every real estate professional should know. 1.  Fair Market Rental “Floor” Provision: If it is a fair market value option, the Addendum contains a “floor” for the benefit of Lessor. That is, the Addendum provides that the new fair market value cannot be below the Base Rent immediately prior to the rent adjustment. This provision can be problematic for certain Lessees. If the market rent at the time of renewal is below [...]

The Automatic Security Deposit Increase Provision

By | June 23rd, 2015|Leasing|4 Comments

The AIR leases contain an often overlooked Security Deposit provision. When there is an increase in the Base Rent, the Security Deposit increases proportionately. Therefore, if Base Rent increases by 3%, the Security Deposit also increases by 3%. This landlord-friendly provision is not the standard in custom leases drafted by attorneys. Nevertheless, when lawyers are involved in negotiating the AIR lease, this provision often remains in the final lease. Tip: If you represent a tenant, consider informing the tenant of this provision during lease negotiations. At the minimum, advising the tenant of this provision will prevent the tenant from being surprised by the increase. In [...]

Modifications to the AIR Purchase Agreement (Part 2)

By | June 16th, 2015|Purchases/Sales|6 Comments

In Part 1 of Modifications to the AIR Purchase Agreement, I discussed four areas of the AIR purchase agreement that Sellers frequently modify. Part 2 focuses on perhaps the greatest area of liability to Seller after the Closing – Seller’s 12 representations and warranties that it makes to Buyer. Paragraph 12.1 of the AIR purchase agreement contains the representations Seller makes to Buyer. Every Seller should carefully read Paragraph 12.1 to ensure that each representation is true. The following are 3 modifications that Sellers sometimes make to limit the likelihood that they will be sued after the Closing if a representation is untrue, or if [...]

Modifications to the AIR Purchase Agreement (Part 1)

By | June 3rd, 2015|Purchases/Sales|6 Comments

In a prior article, I addressed the issue of Should You Use the AIR Purchase And Sale Agreement? Some sellers believe that the AIR purchase agreement does not contain protections afforded sellers in custom agreements. It is correct that a custom agreement drafted by a seller’s attorney will typically favor Seller more than the AIR purchase agreement. Nevertheless, to make the AIR purchase agreement more favorable to Seller, Seller can modify the AIR purchase agreement to include some of the provisions found in many custom agreements. The AIR Commercial Real Estate Association has of course designed its forms to allow modifications. Here are some changes [...]

Should You Use the AIR Purchase And Sale Agreement?

By | May 28th, 2015|Purchases/Sales|6 Comments

Generally, yes. The AIR purchase and sale agreement form is well-drafted and does not substantially favor either the buyer or the seller. As a result, it is frequently used for the purchase of real estate in California. There are many advantages to using the AIR purchase and sale agreement. Brokers, lawyers, buyers, and sellers are familiar with the form. It is therefore much easier for all parties involved to read through the contract and understand the terms to which each party is agreeing. If lawyers are hired to represent the parties, less time is required for the parties to revise and negotiate the terms of [...]

Is Lessor Penalized for Delivering Possession Late?

By | May 7th, 2015|Leasing|Comments Off on Is Lessor Penalized for Delivering Possession Late?

According to the various AIR lease forms, Lessor is required to use its “best commercially reasonable efforts” to deliver possession of the Premises on the Commencement Date. If Lessor uses such efforts and is unable to deliver the Premises on time, is Lessor required to compensate Lessee? No, Lessor is not “subject to any liability” for delivering possession late. However, Lessee does have recourse under the AIR lease. If Lessor has not delivered possession within 60 days after the Commencement Date, Lessee has a 10-day window to terminate the Lease. Again, Lessor is not required to compensate Lessee for any damages Lessee may have suffered [...]

Are Brokers Entitled to a Commission When a Tenant Exercises an AIR Lease Option?

By | April 28th, 2015|Leasing|Comments Off on Are Brokers Entitled to a Commission When a Tenant Exercises an AIR Lease Option?

Yes. Even if the Brokers did not participate in the exercise of the AIR Lease Option to extend the term, the Brokers are entitled to a commission. Paragraph 15 of the AIR lease forms state that “if Lessee exercises any Option, . . . Lessor shall pay Brokers a fee in accordance with the fee schedule of the Brokers in effect at the time the Lease was executed.”  The Brokers entitled to a fee are those listed in Paragraph 1.10 of the AIR Lease. Paragraph 1.10 includes a space to list Lessor’s Broker and Lessee’s Broker. If the owner of the Project at the time [...]

AIR’s Inducement Recapture Provision: When Free Rent Is No Longer Free

By | April 16th, 2015|Landlord-Tenant, Leasing|Comments Off on AIR’s Inducement Recapture Provision: When Free Rent Is No Longer Free

Tenants love free rent.  But they would hate to pay it back. Under the AIR lease, if Lessee commits a Breach, it is required to immediately pay Lessor the value of any free rent or other inducement (TI allowance, etc.) it received (Paragraph 13.3). This type of provision is included in many custom leases as well. This repayment obligation is triggered only after Lessee receives written notice from Lessor of its failure to perform a Lease obligation and fails to cure within the applicable cure period (assuming the failure can be cured). Importantly, Lessee may be required to pay the entire value of the free [...]

Ensure Your AIR Lease Guaranty Is Enforceable: 5 Tips for Brokers/Landlords

By | April 6th, 2015|Leasing|Comments Off on Ensure Your AIR Lease Guaranty Is Enforceable: 5 Tips for Brokers/Landlords

After you successfully negotiated for a lease guaranty, the last thing the landlord wants to discover later is that the Guaranty is not enforceable or difficult to enforce. Here are 5 tips to help avoid such a problem when completing the AIR Lease Guaranty: Entity as Guarantor – Identify Name and Title of Person Signing: The signature block in the AIR Guaranty does not have a specific space for the signatory to write-in his/her name and title. If the Guarantor is an entity, consider including a separate signature block so that the name and title of the person signing the Guaranty is clear. If this [...]

Think Twice Before You Click “Send:” AIR (And Other RE Contracts) Now Allow Notices By E-mail

By | February 25th, 2015|Leasing|Comments Off on Think Twice Before You Click “Send:” AIR (And Other RE Contracts) Now Allow Notices By E-mail

Could a quick e-mail from a Buyer’s broker to a Seller’s broker stating “Buyer finds the environmental report unacceptable” accidentally terminate a purchase and sale agreement? Could an e-mail from a tenant's broker to a landlord's broker stating "tenant is going to exercise the option” be an unintentional exercise of an AIR option to extend a lease? The answer to both questions is yes – now that AIR leases and AIR purchase agreements (and many lawyer-drafted real estate contracts) have recently been revised to allow notices to be sent by e-mail. Attorney-drafted real estate contracts increasingly allow parties to send notices by e-mail. The AIR [...]

Two Ways For Landlords to Maximize Recovery of Expenses (AIR Multi-Tenant Lease-Gross)

By | February 3rd, 2015|Leasing|Comments Off on Two Ways For Landlords to Maximize Recovery of Expenses (AIR Multi-Tenant Lease-Gross)

The AIR multi-tenant lease (gross) is a "modified" gross lease. A tenant pays its share of any increase in taxes and insurance over a base year. However, there is no base year for CAMs (Common Area Maintenance Fees).   A tenant therefore pays its share of the total CAMs for the year.  Many owners of industrial projects modify the AIR lease so that there is a base year for all three items: taxes; insurance; and CAMs. In this situation, there are two changes to the AIR multi-tenant lease (gross) which landlords may wish to make in order to maximize recovery of expenses: Base Year Expenses: [...]

AIR Lease Revises Key “Hazardous Substances” Provision

By | January 26th, 2015|Leasing|Comments Off on AIR Lease Revises Key “Hazardous Substances” Provision

A recent change to the AIR lease will benefit certain tenants that bring Hazardous Substances onto the Premises. Before the revision, when a lease term was expiring, a tenant was required to remove all Hazardous Substances brought onto the Premises during the lease term. Tenants frequently performed work that exceeded statutory requirements. Now, a tenant is required to remove Hazardous Substances it brought onto the Premises only “to the level specified" under applicable law. The revision to Paragraph 7.4(c) of the AIR lease is shown here: The new remediation standard will benefit certain tenants, including many manufacturing tenants and warehousing tenants that store Hazardous Substances. Certain [...]

Ignore Estoppel Certificates At Your Peril: AIR Gives Landlords a New Weapon

By | January 26th, 2015|Leasing|Comments Off on Ignore Estoppel Certificates At Your Peril: AIR Gives Landlords a New Weapon

Has a tenant's failure to complete its estoppel certificate ever threatened to delay the sale of your property or the closing of a refinance?  For many owners, the answer is yes.  A recent revision to the AIR lease forms attempts to solve this problem.  If a tenant fails to timely deliver its estoppel certificate, its Base Rent increases by 10% for the remainder of the lease term. A tenant's timely delivery of an estoppel certificate can be critical.  If an owner is selling or refinancing a property, buyers and lenders often require, as a condition to closing, that they receive the tenant estoppel certificates [...]

Four Landlord Modifications to the AIR Lease

By | January 26th, 2015|Leasing|Comments Off on Four Landlord Modifications to the AIR Lease

In a prior post on the A.I.R. Forms Practitioner, I addressed the question: Should landlords use the AIR lease form?  For landlords that decide to utilize the AIR lease with modifications, below are some of the modifications to the AIR lease that I sometimes include. Transfer Premium: Particularly for longer term leases, I often include a “transfer premium” provision.  A transfer premium provision provides that if the tenant subleases or assigns the lease, and if the sublease rent is higher than the rent that the tenant is paying to the landlord (on a per square foot basis), the tenant must split this “profit” 50/50 with the landlord. [...]

Should landlords use the AIR form lease?

By | January 26th, 2015|Leasing|Comments Off on Should landlords use the AIR form lease?

The AIR form lease continues to be widely used in California.  In a typical leasing transaction, it is the landlord that presents the initial draft of the lease. Advantages of the AIR Lease The benefits of an AIR lease are clear.  Negotiations move quicker when the broker and/or attorney representing the tenant are familiar with the lease document presented to them.  Less time is required to revise a lease that is not as “landlord-oriented” as a typical custom lease.  In some cases, tenants do not even hire an attorney to review the AIR lease, because they understand it to be an even-handed form lease that [...]

Usman Mohammed, Esq.

About Me:

Real estate is my passion, and it is in my genes.  In addition to owning commercial real estate, my family co-founded IDS Real Estate Group.

I represent landlords and tenants in office, industrial, and retail leasing transactions, and have used the AIR forms in hundreds of these transactions. I’ve also represented purchasers and sellers of properties in the various asset classes, and also frequently use the AIR forms in those situations. My practice includes representing landlords and tenants in lease disputes, including unlawful detainer litigation.

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Disclaimer

A.I.R. Forms Practitioner is not affiliated with or sponsored by the AIR CRE. This site is intended for educational purposes as well as to give you general information and a general understanding of the law, not to provide legal advice. Neither I nor Consensus Legal provide legal advice through this website or by messages directed to or from this site. By using this website, the reader agrees that the information on this website does not constitute legal or other professional advice and no attorney-client or other relationship is created between the reader and Consensus Legal or its attorneys. This website is not a substitute for obtaining legal advice from a qualified attorney. The information on this website may be changed without notice and is not guaranteed to be complete, correct or up-to-date.