Commercial real estate leases are complex documents. There’s no one-size-fits-all lease that you can download from a website that will serve your unique needs as a commercial real estate property owner.
These leases need to be crafted carefully and generally negotiated with tenants to help ensure that both parties’ needs are met and that the terms are fully understood. Even if you have a “standard” lease that you have developed with your legal team, it’s important to review it regularly to make sure it is still appropriate.
Even if you’re conscientious about carefully reviewing your lease agreements whenever you get a new tenant, it’s still possible to miss an update or change that needed to be made. It’s also possible that something regarding the property or the law could change – or that there could be some unforeseen circumstance that warrants a change. Someone might discover an error or inconsistency after the document is signed. There might be an outdated name or address buried in the agreement, for example.
Fortunately, it’s generally possible to make corrections and amendments to a commercial real estate lease without creating a new one. Let’s look at the two most common ways to do that.
A lease amendment
A lease amendment is the most thorough way to update a lease short of creating a new one. One amendment can be used to update any number of items in a lease. Therefore, if a clause needs to be updated, you can use the amendment to go ahead and correct any outdated information or spelling errors at the same time.
A bi-lateral letter agreement
A bi-lateral letter agreement is typically used when a minor correction or update needs to be made. Unlike an amendment, they are simple enough that they may not require legal oversight to put in place. Therefore, they’re faster, easier and less costly to develop.
It’s crucial, however, not to just use a letter agreement when an amendment may be required. It’s also wise to get legal guidance whenever you and a tenant are signing any document. This can help you prevent potentially costly and time-consuming issues down the line.
