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What is an Addendum to a Lease?
An addendum to a lease is a separate legal document added by the landlord to the original lease agreement between the landlord and a tenant. Lease addenda are used to provide additional information that the original lease does not cover. Examples of addendums may include pet addendum, smoking addendum, and lead paint disclosures. Some addenda, such as the lead paint disclosure, are required by law to be added to lease agreements.
Addendums to lease agreements can include both residential lease agreements and commercial lease agreements . The addendum must be signed by both the landlord and the tenant.
How to Write an Addendum to a Lease
An addendum to a lease can help address unique issues specific to a property. If you choose to create your own addendum, there are some basic rules you can follow.
- An Addendum must include basic elements of any lease agreement between a landlord and tenant. A lease agreement is a legal contract between a user and an owner for the use on asset, generally a real estate property. An addendum can be used for any kind of lease, including a land lease, commercial lease, residential real estate lease, office space lease , etc.
- In an addendum to a lease, you will need to add the dates , names and addresses of all parties involved in the original lease agreement.
- Each addendum should contain a specific and separate issue.
- Each title should contain “addendum” after the issue being discussed.
- An addendum is generally 1-2 pages long .
- All addenda need to be signed by both parties before they are legally enforceable.
Does an addendum supersede a lease?
The addendum is a part of the lease agreement. Therefore, it does not stand on its own. However, the addendum should make references to the lease, contain the same date and name of parties as in the original lease agreement. If the addendum states that its addition will modify an existing clause in the original lease agreement, then one can make a case for it superseding the original lease contract. The addendum should clearly state if it adds to or modifies any part of the original lease agreement.
Here an article on an addendum to a lease.
Types of Commercial Leases
There are multiple types of leases to consider, but we will highlight three types of commercial leases below:
- Single Net Lease: A single net lease, or net lease , only requires the tenant to pay property taxes in addition to rent. In a single net lease, the tenant bears the minimal amount of risk. Expenses other than property tax and rent, such as insurance, maintenance, utilities and repairs are paid by the landlord. The landlord also is responsible for any repairs or maintenance issues in the property during the lease. Tenants end up paying slightly less rent under a single net lease due to the added property tax cost.
- Double Net Lease: A double net lease requires the tenant to pay property taxes as well as insurance premiums in addition to rent. In a double net lease, the landlord bears all maintenance costs. Tenants end up paying a lower base rent because of additional expenses involved. This type of lease is generally used in large commercial rental spaces where tenants might rent areas with varying square footage. The landlord assigns taxes and insurance costs to tenants proportionally, depending on the size of square footage being leased per tenant.
- Triple Net Lease: A tripe net lease , or a NNN lease, requires the tenant to pay property taxes, rent, insurance premiums as well as maintenance costs. A triple net lease is the least risky for any landlord. The tenant is also responsible for any costs, such as structural maintenance and repairs. Therefore, when maintenance costs are high, tenants can try to get out of their leases. As a result, often under tripe net leases, landlords attempt to use a bondable net lease–which cannot be terminated before its expiration. Triple net leases have their own pros and cons.
Image via Pexels by Max Vakhtbovych
Pros and Cons of Triple Net Leases
A triple net lease provides the most security for a landlord. This can have its own set of pros:
- Long term occupancy: Triple net lease agreements generally offer long-term occupancy thus providing security for the landlords.
- Low-risk investment: Since the tenant is responsible for all costs associated with the property, a triple net lease agreement is a low-risk investment for the landlord or investor.
- Consistent Income Stream: Long-term occupancy structure of a triple lease agreement also makes it a consistent income stream for the landlord.
- Build Equity: The low-risk nature of a triple net lease agreement makes it a good option to be added to investment portfolios to build equity.
- Reduced landlord duties: A triple net lease reduces the landlord’s responsibilities as the tenant is responsible for most costs and maintenance issues associated with the property.
- Tax benefits: Since tenants pay property taxes under a triple net lease, they can use these expenses as their business expenses to get tax benefits.
This doesn’t mean that tripe net leases do not pose any problems to landlords. Here are some cons of triple net leases:
- Earning caps: Since triple net lease agreements require long term commitment, they generally lock in the rent value with no option to increase rent if property value increases.
- Vacancy risks and rollover costs: There is a risk of default by the tenant and in that case investors would incur losses and will have to cover all property costs.
- Assuming property expenses: For the tenants, the responsibility to pay all property costs and maintenance costs can be a financial burden.
- Tax liabilities: Tenants responsible for property taxes also become responsible for associated liabilities such as late or incorrect tax remittance.
Here more on different types of leases .
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Meet some of our Addendum to Lease Lawyers
October 1, 2021
My career interests are to practice Transactional Corporate Law, including Business Start Up, and Mergers and Acquisitions, as well as Real Estate Law, Estate Planning Law, and Intellectual Property Law. I am currently licensed in Arizona and Pennsylvania, after having moved to Phoenix in September 2019. I am currently General Counsel for a bioengineering company. I handle everything from their Mergers & Acquisitions, Private Placement Memorandums, and Articles of Amendment to Intellectual Property Assignments, to Employment Law and Beach of Contract settlements. I have 4 years experience handling commercial breach of contract cases working with Burton Neil & Associates, P.C. I have experience with Intellectual Property infringement after having worked for Ryley Carlock & Applewhite. I have also recently gained experience with Estate Planning law, drafting numerous Estate Planning documents for people such as Wills, Powers of Attorney, Healthcare Directives, and Trusts. I am looking to further gain legal experience in these fields of law as well as expand my legal experience assisting business start ups, mergers and acquisitions and also trademark registration and licensing.
October 18, 2021
I love contracts - and especially technology-related contracts written in PLAIN ENGLISH! I've worked extensively with intellectual property contracts, and specifically with IT contracts (SaaS, Master Subscriptions Agreements, Terms of Service, Privacy Policies, License Agreements, etc.), and I have built my own technology solutions that help to quickly and thoroughly draft, review and customize complex contracts.
October 13, 2021
I am a software developer turned lawyer with 7+ years of experience drafting, reviewing, and negotiating SaaS agreements, as well as other technology agreements. I am a partner at Freeman Lovell PLLC, where I lead commercial contracts practice group. I work with startups, growing companies, and the Fortune 500 to make sure your legal go-to-market strategy works for you.
October 4, 2021
Atilla Z. Baksay is a Colorado-based attorney practicing transactional and corporate law as well as securities regulation. Atilla represents clients in the negotiation and drafting of transactional (e.g. master service, purchase and sale, license, IP, and SaaS agreements) and corporate (e.g. restricted stock transfers, stock options plans, convertible notes/SAFE/SAFT agreements, bylaws/operating agreements, loan agreements, personal guarantees, and security agreements) contracts, in-house documents (e.g. employment policies, separation agreements, employment/independent contractor/consultant agreements, NDAs, brokerage relationship policies, and office policy memoranda), and digital policies (e.g. terms of service, privacy policies, CCPA notices, and GDPR notices). Atilla also reviews, and issues legal opinions concerning, the security status of digital currencies and assets. Following law school, Atilla practiced international trade law at the Executive Office of the President, Office of the United States Trade Representative, where his practice spanned economic sanctions enacted against goods originating in the People’s Republic of China valued at $500 billion. Afterwards, Atilla joined a Colorado law firm practicing civil litigation, where the majority of his practice comprised of construction defect suits. Today, Atilla's practice spans all corporate matters for clients in Colorado and the District of Columbia.
October 8, 2021
After graduating from The University of Chicago Law School in 2002, Clara spent eight years in private practice representing clients in complex commercial real estate, merger and acquisition, branding, and other transactional matters. Clara then worked as in-house counsel to a large financial services company, handling intellectual property, vendor contracts, technology, privacy, cybersecurity, licensing, marketing, and otherwise supporting general operations. She opened her own practice in September of 2017 and represents hedge funds, financial services companies, and technology companies in a range of transactional matters.
October 11, 2021
Founder and owner of Grant Phillips Law.. Practicing and licensed in NY, NJ & Fl with focus on small businesses across the country that are stuck in predatory commercial loans. The firm specializes in representing business owners with Merchant Cash Advances or Factoring Arrangments they can no longer afford. The firms clients include restaurants, truckers, contractors, for profit schools, doctors and corner supermarkets to name a few. GRANT PHILLIPS LAW, PLLC. is at the cutting edge of bringing affordable and expert legal representation on behalf of Merchants stuck with predatory loans or other financial instruments that drain the companies revenues. Grant Phillips Law will defend small businesses with Merchant Cash Advances they can no longer afford. Whether you have been sued, a UCC lien filed against your receivables or your bank account is levied or frozen, we have your back. See more at www.grantphillipslaw.com
November 12, 2021
Pico & Kooker provides hands on legal advice in structuring, drafting, negotiating, interpreting, managing and enforcing complex high value commercial transactions. Adept at navigating complex environments, Jonathan has extensive expertise advising clients on a wide range of long- and medium-term cross border and financial engagements, including public tender participation, PPPs, export sales agreements as well as policy and regulatory formulation. Jonathan and his co-founder, Eva Pico have represented and acted on behalf of lenders, global corporations and other market participants across a range of industries including financial services, infrastructure and transportation. As outside counsel, Pico & Kooker, has developed a strong rapport and working relationship with their clients and appropriately work with their in-house teams to increase consistency, processes and procedures. The company employs a unique approach as practical, business minded outside legal counsel who believe in proactively partnering with their clients to achieve desired results while managing and engaging key stakeholders. They listen to their clients to develop customized solutions that best meet their needs while aligning with their objectives, vision and values. Some representative transactions include advising the World Bank on project finance and portfolio options to address the costs and risks associated with integrating renewable power sources. Also advising them as legal counsel, Jonathan developed policies, regulation and models for emerging market governments entering into public-private partnerships. In addition to his work with the World Bank, Jonathan has worked with some of the world’s largest consulting firms, financial institutions and governmental organizations, including the United Nations, the governments of the US, UK and select African countries. Through out his career, he has worked with large, multinational corporations both by consulting in-house and acting as outside counsel on large cross-border transactions. He graduated from Georgetown University’s law school and was admitted practice as a lawyer in New York, England and Wales and, as a foreign lawyer, in Germany. He has written several articles for trade journals and has been cited by several business publications in worldwide. Jonathan is a native English speaker and has high proficiency in German and a functional understanding of Spanish.