Appeasing the Landlord for a Speedier Lease Transaction
- Sep 18, 2013
I’ve had many clients not fully understand the items any landlord will require before signing a lease. What one must remember is the landlord is basically “lending you” the space or building for a specific period of time. It is imperative that the landlord (and often the lender) have a comfort level that the tenant will be able to make its monthly lease payments. At a minimum, landlords will be requiring the following items:
1. Corporate or personal lease application. These applications generally require the company’s name and address along with the standard information such as telephone number, date of incorporation, type of corporation along with the officers names and their contact information. The applications are used, obviously, to run the potential tenants’ credit and determine their payment history.
2. Company financial statements & two years of tax returns. Many landlords will require at least two years of company financial statements along with two years of tax returns. The company financial statements generally include income statements, balance sheets and any other ancillary information that needs to explain the financial reports.
3. Bank statements. Many landlords require looking at current bank statements in order to see the amounts of consistent balances a tenant has. If a tenant is consistently has low balances, this can be a concern for the landlord.
4. Guarantor. After reviewing the financials, landlords may require a personal guarantor or multiple guarantors. Those individuals will need at least two years of personal tax returns, banks statements along with a personal-lease application.
5. Rent & security deposit. Once leases are agreed to by the parties, a tenant will need to provide the first month’s rent and a security deposit equal to an amount that is negotiated.
6. Insurance. Generally, a landlord will require insurance “prior” to signing a lease, but a tenant must realize that prior to occupying a space, they will need to provide the landlord with a minimum amount of insurance. I’ve seen it as low as $1 million and as high as $5 million per occurrence.
Should a tenant have the above information prepared in advance, the transaction is simplified, and there is no rushing around for required documents.