Results 1 to 9 of 9
  1. #1
    Join Date
    Aug 2015
    Posts
    7

    Default What is Adequate Consideration to Support a Commercial Lease

    My question involves real estate located in the State of: Florida

    Experts, speak to me of "Consideration," and how it would apply in an instance of a verbal/informally written lease agreement.

    Our start-up company planned to lease a business space for a one year term. This space consisted of a smaller portion that traditionally is then subleased out to customers on a shorter term basis. (i.e.: Salon space and renting out chairs). Due to the perceived risk of our infant company, we formed an agreement with the owner wherein he would agree to lease us the space, provided we could substantiate our ability to afford the annual lease. The understanding was that we would do so by securing the sublease first, essentially "pre-leasing" the sublease space to one of our clients to guarantee the fund availability for the main lease. If/when this was validated by the owner and more importantly, his attorney, he would then grant us the lease. This agreement was discussed several times in person amongst other business partners, and particularly via e-mail where the owner requested a summary of the business plan and process to forward to his attorney for approval. (Subsequently, it was in fact approved, complete with a clause written in to the drafted lease granting the permission to sublease.)

    Unfortunately, as we were awaiting the approval, an issue arose where our "legal" authorization and right to sublease the property was challenged, citing the fact that we did not have the annual lease in place before subleasing the space out, despite the agreement with the property owner. Adding to the mess, I currently have two different business attorneys telling me two different things; the first obviously being that one can clearly see based on all of the written communications with the property owner that we were well within our rights to proceed as we did. On the other hand, another very assured fellow saying that the only thing that matters to the Court is what the law says, and the law makes whatever agreement we had with the property owner an informal negotiation, not a binding agreement - based on the fact that there was NO CONSIDERATION, and therefore no title. He goes on to state that this consideration means money only, and because we had not gotten to the state of exchanging funds and signing the main lease, this will only end in defeat for us.

    Having a difficult time believing that the property owner (who is a realtor himself) and his attorney would permit an agreement so far outside the law, I Googled "consideration" in the legal sense, and came up with the following legal definition: Something of value given or promised by one party for the promise of another. Valuable consideration can include money, work, performance, assets, a promise, or abstaining from an act. Additionally, the definition goes on to state that both "Valuable consideration" (money or a promise of something that can be measured in terms of money), and "Good consideration" (a promise that cannot be measured in terms of money, such as love and affection) are sufficient to enforce a contract; that the law typically does not concern itself with the fairness of consideration, that what is exchanged need not have the same measurable value, and that the law will accept that the parties thought the consideration to be fair because they freely agreed to the exchange.

    Therefore, does the owner's promise to lease us the space in exchange for a) our promise to provide proof of a sublease/funds, and b) our promise to perform thereafter NOT constitute a valid form of Consideration? While no money had changed hands just YET, that was strictly due to the designated order of steps that had to be taken to be approved. Nevertheless, these promises were exchanged and acted upon with the intent of following through, right up until the point of challenge. Will a Court not recognize this?

  2. #2
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: What is Adequate Consideration to Support a Commercial Lease

    Quote Quoting Drill
    View Post
    Unfortunately, as we were awaiting the approval, an issue arose where our "legal" authorization and right to sublease the property was challenged, citing the fact that we did not have the annual lease in place before subleasing the space out, despite the agreement with the property owner.
    By whom? The prospective subtenant?

  3. #3
    Join Date
    Aug 2015
    Posts
    7

    Default Re: What is Adequate Consideration to Support a Commercial Lease

    Correct. Mind you, this came up only after she had paid to rent the space. The subtenant knew of the arrangement with the owner, as did her own realtor who inspected the property, which had the "for rent by owner" sign squarely at the entrance. Her realtor also looked up the property record to make sure it was in good standing with the owner before the subtenant committed, therefore the "I had no knowledge" claim is out the window. Meanwhile, we had other clients who wanted the space, and when told that we either needed to move forward or move on with someone else, that prompted the subtenant to send the funds for us to consider the space leased to her and turn the others away. All was well, until we learned that the subtenant's mother came a few days later to see her daughter's new space and took issue with the location. She then called us to say she was backing out because her mother didn't like the area, and asked us to find someone else. Upon the advice of our own attorney, we in fact tried to do so in efforts to keep the peace, but ultimately failed due to the short notice. That was when things turned ugly, and now the story has shifted from, "My mother didn't like it," to "You illegally subleased to me so you could con me out of money." It would seem that it was only ok for us to illegally sublease to someone else as long as it meant getting her money back.

    As mentioned in the OP, the argument has centered on the question of consideration between the property owner and our company, as to whether we were within out right and had the authorization to secure the sublease first, in accordance with the process of the agreement. Does the written evidence of that agreement support and show valuable consideration?

  4. #4
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: What is Adequate Consideration to Support a Commercial Lease

    If your subtenant won't agree to rent from you until you finalize your lease agreement with your prospective landlord, and your prospective landlord won't rent to you unless you first contract with the subtenant, your options would appear to be: 1. find a different subtenant, 2. negotiate different terms with your landlord (e.g., find a cosigner, or 3. find different premises to rent.

  5. #5
    Join Date
    Aug 2015
    Posts
    7

    Default Re: What is Adequate Consideration to Support a Commercial Lease

    Quote Quoting Mr. Knowitall
    View Post
    If your subtenant won't agree to rent from you until you finalize your lease agreement with your prospective landlord, and your prospective landlord won't rent to you unless you first contract with the subtenant, your options would appear to be: 1. find a different subtenant, 2. negotiate different terms with your landlord (e.g., find a cosigner, or 3. find different premises to rent.
    I appreciate your reply, but the problem we are having is that the subtenant already rented from us. When we informed her we had other parties that wanted the space, she said no, she wanted it and when told we would need at least 50% payment for the rental term to consider it hers, she agreed and sent that payment so we could begin readying the space for her occupancy. All of this occurred via text messages so it is in writing per se. Only after her mother took some issue with the location did it suddenly become "illegal" as a means to demand her money back after it had been used on her requests. It is not a matter of us not being willing to return it. If we hadn't already gone out of our way to prepare her space to her requested specs, there would be no problem.

    What I am trying to find an answer to, is whether or not the agreement had with the property owner constituted our right to sublease. One attorney says yes we are in a good position given the owner's consent and participation in the arrangement. Another is focused strictly on the idea that according to law, transactions must happen in a specific order to be valid, and despite the agreement with the owner authorizing us to go "out of order" for this deal, the law is the law and therefore the circumstances or agreements are irrelevant.

  6. #6
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: What is Adequate Consideration to Support a Commercial Lease

    Your problems with your subtenant are not your landlord's problem. If you want to try to sue your subtenant for breaching the lease, you can discuss that possibility with the lawyer of your choice. But if you want to lease the premises, and your would-be landlord won't do so if your tenant isn't willing to commit to the sublease, you had best hustle and find yourself a paying subtenant.

  7. #7
    Join Date
    Aug 2015
    Posts
    7

    Default Re: What is Adequate Consideration to Support a Commercial Lease

    My question is whether the property owner's oral permission to secure the sublease before the master lease is grounds to argue that we did in fact have some right to the property. That, plus the email communications between myself and the owner referencing the plan and the fact it was approved.

    The answer to that will tell me what I am doing in regards to the subtenant.

  8. #8
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: What is Adequate Consideration to Support a Commercial Lease

    You have told us that you had a contingent offer -- if you secured a subtenant the landlord would grant you the lease. You have told us that you did not secure a subtenant who was willing to actually commit to renting, such that you did not meet the contingency. It doesn't matter why your prospective subtenant balked -- even if we take the position that it would have been impossible for you to meet the contingency, you failed to meet it.

  9. #9
    Join Date
    Aug 2015
    Posts
    7

    Default Re: What is Adequate Consideration to Support a Commercial Lease

    Perhaps I have clouded the water with too much detail.

    We did secure the subtenant, which is substantiated through text messages showing the offer and acceptance of the sublease and its terms, and the commitment to it by the subtenant sending her funds so we would consider the space hers. The owner then approved the lease, and that is backed up by the document showing a custom sublease clause added by the owner and initialed by both owner and myself. By everyone's standards, the deal was considered done. We therefore went ahead and prepared the site to her specifications, and had the check written out and on the way to the owner when I got word that the subtenant had changed her tune.

    The opposing argument is that the sublease cannot come prior to the master lease because there was no "consideration" granting a right to the property, regardless of what the personal agreement between the parties was. Our current attorney agrees with this, and says that a written signed lease is the only thing that the Court will deem "consideration". However, two others who have consulted on the case disagree, stating that the owner's oral permission backed up by the communications referencing such does grant some right to the property, as legal consideration can be something as simple as an exchange of promises. I want to have a clear understanding of what the law says, since it seems this case is a "clear-cut slam dunk" until the retainer check gets deposited, and then I'm told differently. I do not want to repeat that process with another attorney, and if it comes down to having to argue this myself, I want to be clear that my argument is actually valid.

    1. Sponsored Links
       

Similar Threads

  1. Establishing an Order: Will a Child Support Order Take Into Consideration Past Voluntary Payments
    By Ap3302 in forum Child Custody, Support and Visitation
    Replies: 10
    Last Post: 07-31-2015, 08:12 AM
  2. Calculation of Support: Are Stepchildren Taken into Consideration in Determining Child Support
    By sparrow1227 in forum Child Custody, Support and Visitation
    Replies: 2
    Last Post: 05-12-2015, 11:07 PM
  3. Modification of Support: Consideration of Household Income When Setting Child Support
    By WorkingGirl in forum Child Custody, Support and Visitation
    Replies: 1
    Last Post: 11-03-2014, 02:38 PM
  4. Calculation of Support: Does Child Support Take Into Consideration the NCP's Personal Expenses
    By nagelmotox in forum Child Custody, Support and Visitation
    Replies: 5
    Last Post: 07-12-2011, 04:44 AM
  5. Consideration For WIC In Child Support Calculation
    By letsprocre8 in forum Child Custody, Support and Visitation
    Replies: 8
    Last Post: 02-21-2008, 07:01 AM
 
 
Sponsored Links

Legal Help, Information and Resources