The Three Approaches Generally Used By Attorneys When Drafting Sub-Leases

There are countless reasons why an individual or a business entity would enter into a sub-lease of a property. Whether one is moving-in or moving-out, there are numerous legal implications that must be addressed prior to signing a sub-lease agreement. In general, attorneys use three approaches in drafting and reviewing sub-leases namely: the All-Inclusive Approach, Incorporation by Reference, or the Haphazard Approach.

The All-Inclusive approach is when an attorney will build an entirely new lease but utilizes the prime lease as a reference. Meaning, in drafting the new lease, the attorney is addressing all the rights and obligations of the three parties involved (original lessor, original lessee now the sub-lessor, and the sub-lessee).

The Incorporation by Reference approach is when the attorney incorporates the entire original lease into the sub-lease. Meaning, the original or prime lease is used as the basis of agreement except for any provisions or terms that are expressly excluded or qualified by the sub-lessor and sub-lessee. This approach assumes the validity of the original or prime lease but also qualifies what obligations remain with which party.

The Haphazard approach is when an attorney changes the lease form to say sub-lessor and sub-lessee and inserts terms such as prohibiting each party from causing default under the primary lease. Largely, the parties are left wondering what the consequences or even the agreement really is in this approach.

Although these three approaches laid out above seem to be rudimentary and easy for anyone to apply, they assume an attorney level education and experience that one cannot take for granted. If one were to only look at the terms of a lease, one can see the legalese runs rampant and making the consequences widely unknown for breaches to the ordinary person. Thus, an individual must not take any provisions of a lease lightly as the legal consequences can vary in such capacities up to and including permanent harm to the individual or business entity.

Therefore, the three approaches generally used by attorneys in sub-leases drafting and review may seem basic and unsophisticated but in fact are quite the opposite. Be sure to consult a qualified attorney for your lease and sub-lease issues prior to signing the document. It is wise to always remember that person who negotiates more of the relationship upfront will be the one who spends less when a breach has occurred and often is in control of the outcome.

About Joseph R. Marriott

I am an attorney practicing and servicing the greater New Orleans area. My practice focuses on business and real estate transactions exclusively.
This entry was posted in Property Law, Real Estate Law and tagged , , , . Bookmark the permalink.

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