Landlord to Tenant: “Take this Form or Leave It!”
I was negotiating a lease for a client last week. Of course, it was a “rush” job. Always is. The landlord sent us his tried and tested form. The client had his in house people take a first stab at review. But general counsel would not send comments back to the landlord until I had offered my comments. The client sent me their mark up of the lease. The mark up was the track changes version. It was easy to follow the client’s revisions, comments and concerns.
Not surprisingly, the landlord’s form was a typical landlord form. The person who reviewed the lease in house for the client was perhaps a little over zealous. I did my thing. I softened many “over reaching” landlord provisions. I corrected business terms that weren’t drafted accurately or most favorably to my client, the tenant. I added some typical tenant favorable provisions. And, I changed many provisions that the client’s in house person had made. Where there were total paragraph strikes, I reinserted them when I knew that the landlord would not agree and the provisions would not harm the tenant. I took out inserted provisions that were unusual or overreaching by the tenant. Frankly, I wanted to be reasonable and fair.
But, I encountered a problem. The landlord had locked his document so that I could not simply “reject” the changes that the client’s in-house person had made. I had to delete the change and then reinsert, where applicable. The result was that track changes left me with a multi-colored document showing more changes than we actually had made. The actual changes that and revisions that I made were mostly common changes and revisions. Certainly, there were some that would have to be negotiated, but for the most part, an experienced and savvy landlord would not be surprised to see many of the changes I had requested.
This was not the case, however. Upon receipt of our revised, track changes lease, the landlord and his representative refused to even review the revisions or consider our requests. They simply looked at the document and assumed that I had “re-written the lease”. They responded to me that this form has been used to lease over 2,000,000 square feet of space and they were not about to change it. If we were serious, I would be limited to 5 “deal killer comments”. The landlord also told me not to bother correcting any “perceived grammatical errors or typos” (I had corrected numerous defined terms that had not been properly defined or capitalized. Might as well clean things up as you are doing revisions and fix inconsistencies).
My client owns and leases hundreds of thousand of square feet as well and is a billion dollar company. While we tried to explain the issues with the track changes and locking the document, the landlord’s agent pretty much told me to look for other space. This did not go over well with my client. As an experienced negotiator, I don’t want to negotiate against myself either. So, there was no way that I was going to limit my comments to 5 comments.
Ultimately, I re-did my comments on the original draft of the lease, without including the objectionable changes by the client’s in house reviewer. However, all of my other changes (sans the “perceived grammatical errors and typos” and one large change that I decided that I could live without), were included in this revision. Landlord’s agent immediately responded that this was much better and that they could work with this draft.
Though it was more work for me, I think that we will now come to terms on this lease. I had to put on my “old school” hat to make this lease work. Sometimes, technology can be a burden. I should have realized that my first time through the lease and worked off the original version of the lease rather than the client’s mark up. I might have been more sensitive to this had I been working with the landlord’s agent prior to submitting my revisions. On the other hand, it is also common courtesy to let the people you are working with no what restrictions you have placed on your documents when providing them with drafts. While it certainly makes sense that a document should be protected from third (3rd) party edits, it is not common that it would be locked so as to prevent a subsequent editor from undoing or changing his/her edits. Lesson learned, and I have written about this before, know who you are dealing with before entering into negotiations and know their expectations. In this case, the landlord (and even his agent) were not very technology savvy and nearly walked away from a deal over pride of ownership in a trusted form.