Broker or Real Estate Counsel: Who Negotiates Which Part of a Commercial Lease

Where the broker's work stops and counsel's begins

The split follows the documents. The letter of intent is a business document a few pages long, and the broker drafts and argues it from comparable deals. The lease is a legal document, usually written first by the landlord's attorney on the landlord's own form, and your attorney marks it up.

• Broker: rent and escalations, free rent, the improvement allowance, term, options to renew or expand, the amount of security, the delivery date.
• Attorney: how each of those is defined, and what happens when something goes wrong.

The overlap is deliberate. A point won in the letter of intent can vanish inside a definition. So on a search we run, we read every lease draft against what was agreed, and your attorney tells us when a legal point carries a price.

When a first-time tenant should bring counsel in

Before the letter of intent is signed, not after. Most of that letter binds neither side, but paragraphs on confidentiality or exclusivity are often written to bind both, and a term left vague there gets settled later on weaker ground. An hour of counsel's time at this point is cheap next to the weeks it can save.

The second moment is the first lease draft. From there the attorney leads, and two or three rounds of drafts across three to six weeks is normal. How a letter of intent works sets out what the document should contain before counsel sees it.

What counsel reviews that a broker does not

• Default and remedies: what counts as a default, how long you have to cure it, and what the landlord may do next.
• Indemnity and insurance: who answers for which loss, and the coverage the lease obliges you to carry.
• Restoration: what you must remove when the term ends. Left undefined, it gets priced at move-out.
• The wording of the guarantee: the notice period, the scope and the conditions of release under a good guy guarantee.
• Assignment mechanics: how consent works, and what happens on a sale of the company.

These are legal questions and the answers depend on the specific lease, so your attorney should confirm each one. Red flags in an office lease describes where they tend to hide.

Choosing counsel for a startup's first lease

No firm is named or ranked here. Three things are worth checking in any attorney you interview.

• New York commercial leasing work. Office leases here carry local conventions, from the good guy guarantee to increases above a base year. A generalist learns them on your time.
• Experience on the tenant's side. Ask how many leases the attorney has negotiated for tenants of your size in the past year.
• Turnaround. Ask how quickly a marked-up draft comes back. Slow responses from the tenant's side are a common reason a lease stage runs long.

Ask about fees at the start, and whether the quote covers the letter of intent as well as the lease.