Sometimes a tenant focuses their energy on finding an office space and designing the space but they forget that there is a lease document. This lease will have an impact on everything that happens over the lease term with the relationship they have with their landlord. Therefore it could be more important than the paint color of the CEO's office.
For many years I managed office buildings and I was the enforcer of the lease. It is never a good feeling to have to stop tenants plans because they didn't know what rights a landlord has but one day I had to do just this to a tenant.
A typical office lease has a sublease clause that describes how a tenant may either sublease or assign their lease. The tenant approached me because they wanted to sublease their space so they could relocate their business and they needed landlord approval to assign the lease to the sublessee. Unfortunately, they waited for the last minute to ask and the lease gave the Landlord thirty days to approve the sublease. This landlord took 28 days to approve the sublease and caused a great deal of stress for the new sublessee and the tenant.
The landlord also had the right to terminate the lease by recapturing the space. This was great news for the tenant because it would terminate the lease but terrible news for the subtenant. The subtenant began to look for new space because they didn't know if they had a space and the tenant could have been told on day 28 that the sublease was approved but they lost the sublessee.
There are ways to get a good sublease clause so you can avoid this problem. You just need to know what to look for before you sign your lease.
My point is that nobody thought about this scenario when the lease was being executed. They were focused on other important areas and had no idea that there was a snake in the lease that would bite them years into their lease term.
Some Tips To Trap The Office Lease Sublease Clause:
Fees: Landlords may require a fee to review your sublease request. They may also have the ability to charge you for their attorneys fees. Try to remove this fee before you sign your lease.
Recapture: In the case of my tenant it was preferable if the landlord recaptured the space and terminated the lease. The issue was the landlord had thirty days to decide. If you cannot get the landlord's recapture right removed at a minimum have a short time for the landlord to inform the tenant and even better remove the right.
Approval Time: A reasonable time is five business days. The landlord isn't going to contemplate your sublease request for thirty days. They know if they are going to grant it as soon as they review.
Landlord's Consent: The landlord usually has a consent document that they will give to both the subtenant and the tenant to sign. There usually isn't any negotiation on this form but it is helpful to know in advance what your landlord will send to you to sign. When you notify your landlord of your decision to sublease your space ask them for a copy of their designated sublease consent document.
Sublease Right: The landlord must be required to not unreasonably withhold or delay their approval.
Sublease Restrictions: Sometimes the landlord will prohibit a tenant from subleasing to a present tenant or a prospect looking at the building. Remove this language from the office lease before you sign it.
Watch Out For Your Neighbors: Sometimes other tenants may have an Exclusivity Clause in their lease. This clause gives them the right to be the only business of their type in the building. An example could be a title company. When you meet with your landlord to let them know you are subleasing your space ask them if any other tenants have an exclusive. This will help you avoid wasting time negotiating with a business that will not get landlord approval.
Kevin Finch has helped hundreds of Dallas office space users find and lease subleases in Plano, Frisco, Allen, McKinney, Richardson, and Dallas. There are more types that I would like to share with you. So, please contact me and I will be happy to answer your office lease sublease questions.