Building Better Leases Series – Term: Delay in Possession

Building Better Leases

Delay in Possession refers to the rights and duties of the Parties if the leased property is not delivered to the Tenant on the Commencement Date of the lease. This term protects the Landlord from being held responsible for a delay.

There are various reasons for a delay. One reason could be related to a legal dispute between a Tenant and Landlord. In some instances, a struggling tenant will stop paying rent in the months before their lease ends and then file bankruptcy in the final days of the lease which protects the Tenant for months while filing makes its way through the courts. Another reason could be related to an incoming Tenant’s request for improvements. If the existing Tenant takes longer to leave, it delays the Landlord’s ability to start making improvements for the new Tenant. Sometimes the delay is related to the construction itself. Construction requires permits, drawings, bidding, etc. which will often delay the ability of the Lessee to obtain possession. It’s important to note that failure to provide possession by the Commencement Date does not necessarily invalidate the Lease.

Furthermore, the standard AIR lease has provisions for things that are out of control of the landlord. The standard time frame for delivery of the premises is set at 60 days. I’ve seen it shorted to 45 days on occasion. Most non institutional landlord’s prefer that the tenant do their own tenant improvements which would negate a) the need to pay for the improvements by offsetting them with free rent, but b) negate most of any delay in possession exposure.

The information provided does not, and is not intended to, constitute legal advice; instead, all information is for general information purposes only. Consult an attorney for legal advice.