What’s the most ridiculous lease clause you’ve encountered?

What’s the most ridiculous lease clause you’ve encountered? This was a question posted in a LinkedIn Discussion Group.  Here are some example lease clauses that drive brokers and tenants crazy.

• A real estate developer always puts a standard clause in all offers to purchase or lease land that said “the soil bearing capacity must be at least 3000psi”. Actually 3000psf (pounds per square foot) is a very common minimum soil bearing capacity for lightly loaded buildings. 3000 pounds per square inch is virtually unachievable. He saw this as a guaranteed escape clause if he later decided not to pursue an offer, and was quite proud that the clause had never been caught by a lawyer’s review of his offers.

• A landlord had 2 full pages on “Chihuahua entry.” It was a small mom and pop shop where the owner wanted to bring their dog into the shop. Rather than address what really should be addressed (indemnification for dog bites, restraining the animal, cleaning, etc.), the provisions set forth the hours and times that the dog would be in the shop, as well as the dress of the chihuahua (apparently it was only to wear pink clothing and no leather except for a leather collar) and one short sentence on barking.

• I had a national retail tenant try to tell me, if they elect to terminate due to an exclusive violation, Landlord must pay Tenant $500,000.

• A church whose focus was on the coming apocalypse had discussions about what lease language could be used for a term that would be coterminous with the end of the world. No deal was made and I hope they inked a ‘long-term’ deal elsewhere.

• Multiple operating expense cost pools are out of hand. Recently I received a lease for a client with 5 separate cost pools: Expense, Tax, Insurance, Utilities, and for the first time I have seen, Capital Expenditures. What’s next? Janitorial anyone?

• I negotiated a lease that contains language that specifically prohibits Tenant from subleasing to a company in the business of manufacturing or distributing pork products. When the draft came back from my attorney, he had inserted a picture of Porky Pig with a big red circle and red line through him.

• We once sent a memo to our staff advising that we were going to add the following paragraph to all commercial leases where we represented the Landlord. “End of World. Upon the occurrence of the end of the world before termination of this Lease and performance of all of Tenant’s obligations, the obligations, at Landlord’s sole option, shall become immediately due and payable in full and may be enforced by Landlord against Tenant by any available procedure. For remedial purposes, Landlord shall be deemed aligned with the forces of light, and Tenant with forces of darkness, regardless of actual ultimate designations of any particular party or attorney of any party, unless and until Landlord elects otherwise in writing.” Our staff was incredulous and couldn’t believe we’d insert such a clause until they saw the date of the memo — April 1.

• I was representing the owner in leasing his warehouse that was in a less than desirable industrial area. I located a tenant and the lease negotiations went well until the tenant demanded a clause that relieved him from any obligations to repair the roof if damaged by bullet holes. It became a sticking point for the owner knew that on the Fourth of July and New Years Eve everyone pulled out their weapons and shot them in the air and sometimes at each other. After a week of haggling it was agreed that the owner would be responsible for damaged caused by a descending bullets and the tenant would be responsible for damage caused by ascending bullets.

• The one that irritates me is the restrictions on use of a like kind prior use. An example, is a prior gas station site cannot not be used as a future gas station site. This is a direct manipulation to lower supply therefore driving up prices for petroleum products. Less sites means more demand on the sites left. it also is restriction of property rights.

• I worked with a very eccentric older man who was overly confident that the deal would go through. There was another gentleman involved and we’ll call him “Henry”. The eccentric buyer told me the only way this deal doesn’t get done is if “Henry” dies. In the offer to purchase we put a clause in that said the deal is conditional upon the death of “Henry”, if Henry should die the deal is null and void.

• A New York lawyer insisted that we have 3 pages of condemnation language in a lease of space on the 33rd floor of the Sears Tower. He insisted that he had to deal with the possibility that the air rights where the 33rd floor was might be condemned.

• I once had to negotiate a “clean you spittoon” clause out of a lease. Obviously the lease had not been modified since the early 1900s!

• My favorites (or non-favorites) are some of the outlandish co-tenancy clauses that were being written before the latest bust. The deal-makers would sign any ridiculous language in the go-go days… then suddenly things have changed and hapless lease administrators are stuck trying to apply language that doesn’t even work any more (like those that listed specifics such as Linens ‘N Things, Circuit City, Ultimate Electronics… Lessons for the next round, I suppose!)

• I was recently going to rent an office space and when I got the lease I saw I was limited to hours of 8:20-2:30.

• A provision in the lease that allowed the Landlord to purchase fine art at Southeby’s Auctions, hang the art for 1 hour in the common areas of his retail center, then take the art home to his house and bill the art as common area expense to the Tenants. He had a similar provision for his Lamborghini as billable transportation from his home office to his center, again billable to the Tenants.

• I just had a huge argument over the clause: upon leaving the property, ‘Tenants must pay for full professional cleaning and de infestation regardless of whether or not the property is infested.

What are some of your stories?

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