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How can you write lease clauses and terms that are clear and easy to understand for both parties?

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Lease clauses and terms are the foundation of any commercial real estate contract. They define the rights and obligations of both the landlord and the tenant, as well as the duration, rent, maintenance, and other aspects of the lease. However, if these clauses and terms are not clear and easy to understand, they can lead to confusion, disputes, and legal problems. Therefore, it is essential to write lease clauses and terms that are clear and easy to understand for both parties. Here are some tips on how to do that.

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1 Use plain language

One of the most important tips for writing clear and easy lease clauses and terms is to use plain language. Plain language means using simple words, short sentences, active voice, and common terms that both parties can understand. Avoid using jargon, acronyms, legal terms, or ambiguous words that can cause confusion or misinterpretation. For example, instead of writing "The Lessee shall indemnify and hold harmless the Lessor from and against any and all claims, damages, liabilities, costs, and expenses", write "The tenant must pay for any harm or loss that the landlord suffers because of the tenant's actions".

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Dan D'Onofrio, RE Broker, LCAM

PM Professional - Commercial- Affordable to Luxury Multifamily - Condo
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I recall taking a lease that was as thick as a dictionary and reduced it to 5 pages of plain English language that everyone could understand. This was a never ending work in progress depending on life, our society, the demographic you’re in. I’ve always closed with please be clean, quiet and pay on time so that we can take care of you.

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2 Be specific and consistent

Another tip for writing clear and easy lease clauses and terms is to be specific and consistent. Specificity means providing details, examples, numbers, dates, and names that clarify the meaning and scope of the clause or term. Consistency means using the same words, formats, and definitions throughout the lease. Avoid using vague or general words, such as "reasonable", "normal", "as soon as possible", or "from time to time", that can leave room for interpretation or disagreement. For example, instead of writing "The landlord will provide the tenant with reasonable notice before entering the premises", write "The landlord will give the tenant at least 24 hours' written notice before entering the premises".

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Joshua Cawthorn

Financial Analyst | Mortgage Loan Officer | Python Linux SQL
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As a seasoned real estate investor, I've learned the power of clarity in lease agreements. Specificity is key; it leaves no room for misinterpretation. Details like dates and numbers ensure everyone's on the same page. Consistency is equally vital; using the same language throughout avoids confusion. Vague terms lead to disputes; precise language prevents them. For instance, instead of "reasonable notice", specify "24 hours' written notice". Clear, consistent clauses set the stage for smooth landlord-tenant relationships.

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3 Organize and format

A third tip for writing clear and easy lease clauses and terms is to organize and format the lease document. Organization means arranging the lease clauses and terms in a logical and coherent order, such as starting with the basic information, then moving on to the main terms, then addressing the special conditions, and finally ending with the signatures and attachments. Formatting means using headings, subheadings, numbers, bullet points, tables, and fonts that make the lease document easy to read and navigate. Avoid using long paragraphs, complex sentences, or small fonts that can make the lease document hard to follow or comprehend. For example, instead of writing "The rent for the premises shall be $5,000 per month, payable on the first day of each month in advance, plus applicable taxes, utilities, and common area maintenance charges, as set out in Schedule A attached hereto", write:

Rent

The rent for the premises is $5,000 per month. The tenant must pay the rent on the first day of each month in advance. The rent does not include taxes, utilities, or common area maintenance charges. These charges are listed in Schedule A.

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4 Review and revise

A final tip for writing clear and easy lease clauses and terms is to review and revise the lease document. Review means checking the lease document for accuracy, completeness, clarity, and consistency. Revise means correcting any errors, gaps, ambiguities, or inconsistencies that are found in the lease document. It is advisable to review and revise the lease document several times, and to seek feedback from a professional, such as a lawyer, a broker, or a consultant, who can offer advice and suggestions. It is also important to review and revise the lease document with the other party, and to make sure that both parties understand and agree on the lease clauses and terms before signing the lease document.

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5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Michael Polk

Polk Properties /Thought Leader Forbes Business Council @ Forbes.com and Rolling Stone Culture Council/Mc Kinsey Co. Panelist
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Better Call Saul? If you are not a lawyer you should leave the crafting of language to those who do that. Lawyers have a view and an understanding of the construction of contract language and a lease is a contract. Boilerplate may or may not be that. Standard, what does that mean? Call Saul, the Lawyer.

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Tom Warrender

Solicitor | Commercial Property Expert Helping You And Your Business With Their Commercial Property Transaction | Partner | Board Member | Legal 500 recognised Solicitor | Head Of Social Housing | #tomwarrender
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Take detailed instructions. Understand what your client wants...what situation are they trying to cover, what are their key drivers, once you understand that then clear drafting is far easier.

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Michael McGurn

Experienced General Counsel | J.D.
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When I consider a proposed lease, I first consider who I am representing. In 45+ years of practicing law, I have yet to see a "standard lease". If the landlord generates the first draft, which is typically the case, the draft will be very pro-landlord. If I am representing a landlord that would be fine. If I am representing the potential tenant, then I must take into account provisions relating to options, cam charges, rights to relocate, percentage rent, destruction of premises, restive covenants, clawback provisions, etc. Hopefully, there is give and take in the negotiating process, but market conditions will decide in my experience, The foregoing may involve millions. Negotiate well, and good luck.

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How can you write lease clauses and terms that are clear and easy to understand for both parties?

1

2

3

4

5

1 Use plain language

2 Be specific and consistent

3 Organize and format

4 Review and revise

5 Here’s what else to consider

Commercial Real Estate

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How can you write lease clauses and terms that are clear and easy to understand for both parties?

1

2

3

4

5

1 Use plain language

2 Be specific and consistent

3 Organize and format

4 Review and revise

5 Here’s what else to consider

Commercial Real Estate

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