New ERA Article October, 2000

The "Standard" Lease.

In acquiring a coin laundry business, most buyers focus on (1) location, (2) the historical and projected income and expense picture of the business, and (3) the remaining term of the lease to be assumed. It is my experience that most purchasers don’t spend much time reading the fine print of a lease. I am frequently told that since the lease was a printed form and it was entitled "Standard Lease," it must contain "standard" provisions that everyone accepts in the industry.

Tenants generally do not gather together and form an association for the purpose of preparing and printing a "Standard Lease". Landlords, on the other hand, frequently do. As a result, the Standard Lease regarding your business location has probably been prepared by an association funded by landlords. Business leases are thus generally slanted toward the concerns of landlords rather than tenants. Notwithstanding the fact that the lease is a printed form, many of the provisions may be subject to negotiation since the landlord wants your money as much as you want his location.

Everyone always enters into a lease with the expectation that the other side will perform. What if it doesn't work out that way? What if the tenant encounters difficulty in the payment of rent and the lease contains some type of late charge? What if the late charge turns out to be a substantial penalty that could have been avoided if discussed with the landlord prior to signing the lease?

Another common problem that might be addressed during lease negotiations is the concept of tenant or employee parking within the shopping center parking area. The idea of having a fast-food outlet within the shopping center near your laundromat may initially seem appealing; however, if delivery service vehicles monopolize the parking spaces, your customers may look for another nearby laundromat.

Do the common area maintenance expenses to which you contribute a proportionate share include administrative fees or management fees? Some of these fees are entirely legitimate and are incurred by lessors who employ secretarial and bookkeeping services, or a property manager. Other lessors, however, do little in the way of administration, but nonetheless impose substantial administrative fees upon their tenants.

Look further under the lease. You will see phrases such as "Operating Expenses" or "Maintenance, Repairs, Alterations and Common Area Services", or "Liability Insurance - Lessee", or "Property Insurance" or "Real Property Taxes". A number of words will follow each one of these phrases, defining what is meant, but not setting forth a specific dollar amount. If you want to understand the nature of each one of these charges or potential charges, you need to ask questions of your lessor, before you sign the lease. If you don't understand the phraseology of the lease, you need to retain an attorney to assist you, so that he can explain the terms of the lease to you and ask the proper questions on your behalf.

When considering the acquisition of a laundromat, have you examined the utility bills? Sewer usage charges are imposed in the City of Los Angeles through statements rendered by the Department of Water and Power. Other locations, operating through independent water companies, may or may not incur sewer usage charges through a water bill. In some situations, sewer usage charges are to be found under the property tax bill.

Lessors who discover water sewer usage charges imposed upon their real property tax bill will customarily be careful to set forth the lessee's obligation in this regard under the lease. Lessors will, as a matter of cautionary excess, pass along as a charge to the lessee any obligation which vaguely touches upon the subject of water. One lessor, for example, placed the following language in his lease which was lifted directly out of his real property tax bill: "Lessee shall be responsible for the cost of all water used on the Premises, including, but not limited to, any changes by governmental authorities, including, but not limited to, any sewer usage charge, mosquito abatement fee, water stand-by charge, flood control charge and similar type charges which appear on the Joint Consolidated Annual Tax Bill for the Premises."

The only way to properly protect yourself is to carefully read and understand your lease, preferably with the aid of an attorney, before you take pen in hand. After the signature ink has dried, your negotiating leverage will also have dried up!


[This column is intended to provide general information only  and
is  not intended to provide specific legal advice; if you have  a
specific  question  regarding the  law,  you  should  contact  an
attorney  of your choice.  Suggestions for topics to be discussed
in this column are welcome.]


Reprinted from New Era Magazine
Myles M. Mattenson © 2000-2002

	Myles M. Mattenson ATTORNEY AT LAW 5550 Topanga Canyon Blvd. Suite 200 Woodland Hills, California 91367 Telephone (818) 313-9060 Facsimile (818) 313-9260 *Email:* MMM@MattensonLaw.com *Web:* http://www.MattensonLaw.com	The "Standard" Lease.
Myles M. Mattenson engages in a general civil and trial practice including litigation and transactional services relating to the coin laundry and dry cleaning industries, franchising, business, purchase and sale of real estate, easements, landlord-tenant, partnership, corporate, insurance bad faith, personal injury, and probate legal matters. In providing services to the coin laundry and dry cleaning industries, Mr. Mattenson has represented equipment distributors, coin laundry and dry cleaning business owners confronted with landlord-tenant issues, lease negotiations, sale documentation including agreements, escrow instructions, and security instruments, as well as fraud or misrepresentation controversies between buyers and sellers of such businesses. Mr. Mattenson serves as an Arbitrator for the Los Angeles County Superior Court. He is also past chair of the Law Office Management Section of the Los Angeles County Bar Association. Mr. Mattenson received his Bachelor of Science degree (Accounting) in 1964 and his Juris Doctorate degree from Loyola University School of Law in 1967. Bi-monthly articles by Mr. Mattenson on legal matters of interest to the business community appear in alternate months in The Journal, a leading coin laundry industry publication of the Coin Laundry Association, and Fabricare, a leading dry cleaning industry publication of the International Fabricare Institute. During the period of May 1995 through September 2002, Mr. Mattenson contributed similar articles to New Era Magazine, a coin laundry and dry cleaning industry publication which ceased publication with the September 2002 issue. This website contains copies of Mr. Mattenson's New Era Magazine articles which can be retrieved through a subject or chronological index. The website also contains copies of Mr. Mattenson's Journal and Fabricare articles, which can be retrieved through a chronological index. In addition to Mr. Mattenson's trial practice, he has successfully prosecuted and defended appeals on behalf of his clients in various areas of the law. Some of these appellate decisions are contained within his website.