Legal review of a U.S. commercial real estate lease and analysis of the tenant's risks

For a commercial real estate lease that a U.S. company was about to sign for office space, we reviewed the validity of the lease under California law and the legal risks the tenant could face.

The main issues were automatic renewal of the lease and increased holdover rent for occupancy after expiration, the tenant's waiver of its right to demand repairs and its right of early termination, and the landlord's exculpation and the tenant's insurance obligations. It was also necessary to review whether the original tenant's liability would survive an assignment of the lease.

We analyzed California commercial lease law and the lease provisions to review the validity of the tenant's waiver of statutory rights and of the contractual limitation of liability provisions.

We also analyzed the costs that could arise on automatic renewal and on termination, the waiver of subrogation, and liability following an assignment of the lease. We identified the differences between the initial lease proposal and the final lease, and set out points of caution and recommended responses.

While confirming the overall legal validity of the lease, we identified and explained the key provisions that could work against the tenant, and gave specific legal advice on points to check before signing, the lease term and insurance management.

Related U.S. practices: Contracts & Business Transactions