AIR CRE Leases Require Business Interruption Insurance. Will it Cover Losses for Coronavirus Closures?

Publisher’s Note: We are experiencing difficult times in California with the Coronavirus. I hope all is well with you and your loved ones, and our best wishes in the recovery of any of your businesses that have been impacted. California businesses have been suffering and many have closed, either by direct mandate of the government [...]

By | 2020-03-21T01:06:01+00:00 March 20th, 2020|Leasing|8 Comments

Is Earthquake Coverage a Pass-Through Expense In AIR Leases?

Southern California recently experienced a magnitude 7.1 earthquake.  Well before the recent quake, our clients have been increasingly considering earthquake coverage for their buildings.  Under the various AIR Leases, if a Lessor obtains earthquake coverage for its building, can it charge this cost to Lessee? Short answer: Sometimes.  In the AIR “Net” leases, it is [...]

By | 2019-07-25T17:25:30+00:00 July 25th, 2019|Leasing|7 Comments

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

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 [...]

By | 2018-02-19T15:21:56+00:00 February 23rd, 2017|Leasing|2 Comments

AIR Updates Leases For 2017 Disability Access Law

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 [...]

By | 2018-01-31T21:02:47+00:00 January 4th, 2017|Leasing|0 Comments

Think Twice Before You Click “Send” – AIR Allows 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 [...]

By | 2018-02-19T15:24:53+00:00 December 15th, 2015|Leasing, Purchases/Sales|0 Comments

AIR Option – 2 Key Provisions You Should Know

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 [...]

By | 2018-02-19T15:29:42+00:00 November 11th, 2015|Leasing|6 Comments

The Automatic Security Deposit Increase Provision

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 [...]

By | 2018-02-19T15:31:31+00:00 June 23rd, 2015|Leasing|4 Comments

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” [...]

By | 2018-02-19T15:33:14+00:00 May 7th, 2015|Leasing|Comments Off on Is Lessor Penalized for Delivering Possession Late?

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 [...]

By | 2018-02-19T15:36:04+00:00 April 28th, 2015|Leasing|Comments Off on Are Brokers Entitled to a Commission When a Tenant Exercises an AIR Lease Option?

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 [...]

By | 2018-08-16T14:50:33+00:00 April 16th, 2015|Landlord-Tenant, Leasing|Comments Off on AIR’s Inducement Recapture Provision: When Free Rent Is No Longer Free