In my practice as a lawyer, I am often in the position of having to try to clean up a legal mess that could have easily been avoided. The old adage, “penny wise, pound foolish” could never be more apt when someone signs on the dotted line without the benefit of legal counsel. In the past, I worked on litigation involving an individual who wanted to open a restaurant. He trusted the landlord and signed a lease without an attorney’s review. Prospective tenants often believe that leases are just basically “standard boilerplate,” failing to realize how problematic certain provisions can be. Below is a lease provision that caused very substantial financial losses in the form of rent payments and unusable restaurant equipment. Read the language and see if you can spot the disaster that it quietly hides:
Use: Subject to and in accordance with all applicable legal requirements, Tenant covenants and agrees that it shall use and occupy the Demised Premises only as and for a restaurant no other purpose, lawful or otherwise, subject at all times to the rules, orders and regulations of all governmental authorities and departments having jurisdiction thereover [sic]. Tenant hereby acknowledges that Landlord has made no representation or warranty, either express or implied, as to whether the intended use is lawful or permissible or whether the Demised Premises are suitable for such use.
As it turns out, the leased premises were not qualified under the City’s zoning laws to operate as a restaurant. Consequently, the tenant got locked into a multi-year commercial lease that was useless to him. The lease language suggests that the landlord knew of the zoning prohibition. The language is also misleading since it mentions that the premises must be used as a restaurant. Further, the landlord specifically tried to protect himself from liability by offering no warranties about the lawfulness of the use. Without bringing a lawsuit, the tenant in this instance would have been stuck with the dire consequences of failing to successfully navigate the confusing language of his lease.
An attorney experienced in contracts would have immediately recognized the problematic language in the lease. In fact, specific language that disclaims a warranty about the permissibility of the use would have been a huge red flag to an attorney. If you are ever thinking about signing a contract of any type, hire an attorney. The cost will be well worth it.