118 TheEeaLtaBlue Rookol CaLifornia

-^'4 19

O. S. LArR
se$etutlt-Tte@ur.r
w. Ro33 Ca)npbe|l Co.
 Tke Redt! Bl,ueBodt ol Caldforkia 119

Leases-BusinessProDerties
B? O. S. L{B

Function ol Business Ptupertlt Leosps-Whnt i.s .r

LeBe?-Long and Skort Term Laxses-Fo1.ms,Fi1)e Im-
porldnt Po;1Lts- Solpgwrdit'9 the N pgot;ot;ons-When
Either Pa s is o CorynNt;on. Neces*itAior Specializdtion.

fT is inrcresring ro note thar fronr an hlsroriral srandpoinl lpases

-I wefe made use ofl by the Babylonians as far back as 551 B. C. It
is also repo ed Lhat the Grerjans, in the year 500 B. C., leased
goldand silver mines, The Romans followedthis plan in developing
large possessions,and following on down through the yeals of time
we find the English kings made use of the lease system to serve their
Then from England the lease was transplanted to our
tly and frst utiliz€d in Philadelphiaand Baltimore. From these
cities the systemhas spreadto all parts of our country, and has
practicallyof universaluse.
I'UNCTION OF BUSINESSPROPEETYLMSDS
the BusinessProperty Leasehas becomeso popular in its usag€
at it is one of the most vital factors of modem businessproperty in
and maintenance of a prosressive city. Thii is irue
9 TEb]islrl€l!
two prime reasoDs. First: it is a contract determining .
and gov-
ng the use of businessproperty which is profitable to owner! of
property which comprisesthe backboneof a municipality, as the
stipulates a consideration which returns a fair net ii.rcomeon t}le
Ftmentinvolved. Second:the BusinessProperty leasecontracts
a location for tenants whose businesscomtrise the commercial
tivity of all cities,,as it coversa logicallocationfor their businessat
pnce commensurate with its value to the:r enteryrise.
WEAT IS A LEASE?
A leasefundamentally is a contract to fulfill certain acreements
/eentwo partieswhereinonp { the o$ ner or lessor)ha!; lo.atjon
leasqand whereinthe other (the tenant or lessee)desiresto secure.
B locarron.
The slre-nglhof this conlract is.he length to which it goesin be-
tioroughly eguilablein pro{ectingand servjng the in(er;sl of both

IJONC AND SHORA TIME LEASES

I'herc are two generalclassesof BusinessProperty Leases. The
I term lease, and the long term lease,the latter often term€d the
r20 Tlrc ReaItU BIILqBook of Califol'ni&

ninety-nine year rease. lhe fon €r is the most popular and most fre-
quently used, as ir coveN telms from one month (and sometimes even
shorter peliods) to twenty and twerty-live yeals, at considerations
and with obligations in the reach oI a very large pelcentage ol ten-
ants. Thc latter, or'loDg telm lease,is widely used in the larger- east-
€r-n citics, and it is steadily becomiDg more favorably looked upoD in
the lFest as our citics gl.ow older, as a means of developing certain
busiless Dlopelties which might othelwise li€ idle aDd also being the
proDer'method of insurilg continuous iDcome from a principal which
is safegualded against dissipation.
In the general negotiations o{ the shod telm lease thele ale a
Dumber of pApers, oligiDaled at the various stages as the \eork pro-
gresses, aDd these taken in the sequence in which they generally
develop ar'e substantiallv as follows:

TENANT'S PROPOSALTO LEASE

City,
D a t e .. . . . . . . . . . . . .
., 192-.
Nane of Reaitor,
Address.
I helebv propose n d agr€e to leasethe prenises known as . . . _. .
. . .and aDpoirt you tny ageDt to negotiate such
lease on the follo\dng terms and conditions:
L e a s et o c o v e l a p c r i o d o f . , , , . . . . , , y e a r s . . . , . . . , . . m o t l t h s , c o m -
mp .ing........................192....
Total anount to be paid for. said telm, $. . . . . . . ., payabieas follows:

P.e-ise" usedfor'.
S e . uf ' 1 ) . .
I h a n d v o u h e r e r v i t h... . . . . . . . . . . . . . . . . . . - D o l l a r . s(,$ _ . . . . _ . . . . ) ,
which is to be applied on llrst month,s rent, provicled this pr.oposalii
accepted b)' lessor. Shonld I fail to carr']. out lny agreen1entshereiD
contaired. rvil.hin fivc days after. being notified bt you of lessor.'s
ncceptance,said deposit shall be r.etainedby you on aacount of seNices
+ r d n | n d .u ] | ' d o r l l dl " s s o rI u t . . . a l n 1 l i \ f , : o t r o s a\ vl i r h i n. . . . . . . . . .
r......r ojr\1 l.nti .1, '' tr.ri.,i, ,in,
.r.^.1j,t.^-, r.t,^tl
notice to me, this proposal shall immediately becone void and of no
ellect. ar)d said deposit shall be Dlonlptly returned to me. I consent
to_l'our. artng as agelt for aDy othel party or parties and rcceiving
additional compensation therelor.
Reccired Dotlar's
($..............) t o b e u s e d i r a c c o r d n n c$e. i r t h e f o l . e g o i n s .

By

Address
Phone No.
 TlLeRea,l,tyBLueBoak of C.tliforn t t2l

I'his form is filled in vith the desired information, descliption,

etc,, and it is made out in duplicate, Th€ origibal i6 signed by
he prospective tenant, who issues a check for a reasonable amount
at least an amount equal to the first month's rent) and gives it to
broker handling the negotiatiors, The duplicate is always left
Lthe prospeative tenant for his fiies.

OWNEA'SAUTHORIZATIONTO LEASE
City,
D a t e .. . . . . . . . . . . . . 1 9 2 . . -
of Resltor.

In consid€ration of your services, I hereby appoint you my ex-

agent for a period of ... .. .. .. . .... ...dayd from date hereof,
p r o c u rae t e n a n tf o r t h e p r e n i s e ks n o w na s . . . . . . . . . . . . . . . . . . . .

) upon your receiving a written ofer from him in conformity with

above. I co[sent to your acting as ag€nt for any other party or
ies and receiving additional compensetion thereior.

By

No.
T'his form is made out in duplicale and incorporalest]e same
s as tlose in the Tenant's Ploposal. Afl,er proper handlingfrom
standpoint, with the o\dner of the location, it is signed by the
the original is retainedby the broker, and the duplicateis left
the owner for his files.

SAIECUARDINC TI{E NI'COTIATIONS

It is desired that at all times all pa*ies in the negotiations shall

accuralelyposteda! lo what is done,and with lhis in view il.
be noted from, the above that duplicates of all papeB sigred are
ys left with the signers. This is one of the griatist stiirulators
in fair dealing which has been devised, as no one is
T-

t22 The Realta Bluz Boo,kof Csl,ifun L

asked to remember an}4hing, it is aI in writing ard consequentlynot

open to misunderstanding or misitterpretation.
After the negptiations have progressed to this point the broker
senalsby registered mail a letter to the owner and one to the tenant
formally advising of the acceptanceof the Authorization and Proposal
respectively, and advising that the leasesare being drawn and will be
submitted for signatures promptly.
This acceptancelegally ties both parties and eliminates any ind€-
cision as to progr€ss of negotiations on the part of either party, but
the terms in the Tenant's Proposal and Ownels Authodzation must
be identical.
TIIE BUSINESSPROPERTYLEASE (SHOBT TEBM)
MaDy forms have beendevisedto servethis pur?ose,as difrerent
states have specific requirements $hich differ widely from other states
and quite often the various cities stipulate specific conditions which
must be reflectedin the lease.
In any event, both ends are best s€rved by having the lease dran'n
by an attorney who has had many years' experienceand specializes in
this line of work. The high lights of a BusinessProperty L€asemay
be sunmledup as follows:
THE IOURTEEN POINTS TO BE OBSEBVED
First,-It must be drawn in a very thorough, complete and im-
partial manner, serving snd prot€cting equitably the interests of the
owner and the tenant.
Second.-Name the parties between whom the lease is made as
:?l*:"i:T.t*"F"3::::
3""'f""# ::.T:. ?ll""li;;;,' ;; r,ii;;
s f t h e C i t y o f . . . . . . . . . . . . C o u n t y o f . . . . . . . . . . . . a n dS t a t eo f
Joneo
..........etc. Lessee.
Tlird.-Name and describespecifically,accurat€lyand compre-
hensivelythe location and premisesto be leased, giving the street
number,desigrating the sizeof the real estateaDda desc ption of the
rmp!ovements.
Fourth.-Stipulate the term of the lease, giving the beginning
and expiring dates.
Fifth.-Show the rate per month for the various periods ol the
full term with the total rental for the entire telm and specify in what
amounts to be paid and oll vrhat date due, also place payment of
rentals shall be made,
Where tenants erect the building: This building shall revert to
the owner upon expiration of the lease,therefore the time allowed for
removing buildings doesnot enter,
Sixth.-It is usually necessaryand desirable to the faithful per-
formance of the leasethat the lesseedep@it with the lessor a certein
sum of motrey, and il all the terms and conditions are faithfuny kept
by the lesseeand he is not in arrears in any of his obligEtions at the
end of the leasethis money may be applied as rent on the last month!
of the teun.
Seventh.-In order that both parties may be well aware of the
purpose for which the premises are to be used, it is w€ll to concisely
 The Rea,l,tyBIue Boailt of Calif orni.q, 123

cover this point, also to agree rot to us€ the premises for any illegal or
detrimentalpurToses,
Eighth.-It is obligatory on the part of the tenant that he be
responsible for the proper care of the premises and the owner be
reliived of any liability for damage thrcugh negligence or careless-
nessof the tenant.
Ninth.-The tenant shouldagreeto maintain the premises,except
for ordinary wear bDdteir, in a satisfactoryconditionand do nothing
tbat wouldhastenor increase depreciation.
Tenth.-The owner should be granted pelnission to enter the
premisesduring ordinary businesshours for the pur?oseof inspec-
tioD,to determinethat the tenant is conforming to the terms of his
lease.
Eleventh.-The owner also shouldhave the pivilege to alter the
impmvementsor add to them during the term of the leasewithout
any claim from the tenant for rent abatement, etc.
Twelfth.-In casethe prerrises are destroyed by frre, ea*hquake,
etc.,oI are so badly damaged by th€se causesthat they cannot be re-
Btoredin a reasonabletime, then lessor or I€sseeshould have the ght
to cancelthe lease,within a reasonabletime, say thidy days after the
accident. If the lease is rot cancelled by either palty within ihe
specified time, then it is. continuedas in the past.
Thirteenth.-At the expiration of the leaseterm the lesseeshould
vacatethe premises, leaving them in as good condition as they were
l he took possession, ordinary wear and tear excepted.
In our lease,where there is a tax participation clause,it is deter_
after the first or secondyear, or in some casesthe fifth year,
that the lesseehas to pay all increasesin taxes on land and buildirg.
Foufteenth.-The lessor reserves the dght durirg the last sixty
(60) days of the teran to post "For Sale" or "For Lease" sigrs at
t placesin the leasedpremises.
Sigred,
Lessor..,,,
Lessee.,,.,

WHEN EITHDR.PAETYIS A CORPORATION

ID the event the Lessoror Lesseeor both is (are) a corporation,
signing of the leasesmust be anticipated by the directors' resolu-
s,;vid;ncing authoriw for the signing of the lea,seand a copv of
resolutionsmust be attachealto the lease,alsothe corporationseal
be impressedon the leaseand the directors' resolutions.

THE BUSINESSPROPENTYLNASE (LONG TERM)

Ihe ramifications of a lease of tlfs character are of such an

te and involveal nature that no t]?ical folfn may be suggested
servinc dlis Durpose,and it is esspntial Lhat a specialized aLlomPy
t,hmucl business propprty experiancp drall them {Sep Long Term
Realty Blue Book.)
 124 Thc R@lt! Elue E,'ok t,l Cattjutriu

FIVE IMPORTANT POINTS

In making Business Property Leasesit is well to keep in mind:
First.-A leaseto or by a pe$on under legal age may, be ca[celled
at his optiorl. and to make n bi d:ng lease with a person under tegal
age a properll' constituted gualdian nust act lol' him.
Second.-Leases to or. by an i sane person must be made through
a guarciun.
Third.-In naking leaseswith an individual who is married. it is
\yell to have the signature of the other party of the couple. This
makes the contract equally binding.
Fourth.-Administrator.s, executors, or testamentary tlustees caD
noi makc leascsoi esla'e protFr.tywilhoul propcr aulhorily, and under
all crrcIlmstar..es.tl pir authorit! should bp asceiainpd and found
proper before acceptirg leases executed by them.
Fifth.-The signatare oI long term leases should b€ attended
q,ith the same formaliljes as the signing of a deed.

INTRICATE CHARACTER &EQUIRES SI'DCIALIZATION

Due to the itrtricate character of Business property Leases all

negotiations should be handled by brckers and salesmen of lonq and
conclrL.rive exDcrience.as a sa i"f2crorJ outcomeof lhese ne;olia-
tions.depe-ndupon t}le experience and judgment ol one highly spicial-
ized in this particular wor.k, aDd this kno.!,!-ledge
is only obtairied by
years of patient endeavor aIld study of the vital condilions surround-
jng the city's pr.ogress. Each lease requires individual study, a con,
sideration of conditions which may not govern in any otlier ]ease
whatsoever, and as a consequenceif the Business properiy Leases are
negotiated with the careful obser-vanceof these Doints the industrial
ad\aniagp to the c'iy as a lasull of thesenpgoriaiionscannorba over-
estimated.