Steve Freeman: I’m sitting with Steve Katkov of JUX. Is it best to have a written agreement? Or is it okay to have a verbal agreement between a landlord and a tenant?
Steve Katkov: Steve, it’s a great question because many people blur the distinction between the very rigorous requirements of residential leasing with the not rigorous requirements of commercial leasing. So a residential leasing requires, in almost all 50 states, that that arrangement be reduced to a writing containing important terms. What is the monthly rent? What is the term of the lease? What are the requirements if you wish to leave or terminate the lease early? Those kinds of requirements are created by law to protect the consumer. In a commercial transaction, nearly all of those requirements do not come into play. So it is possible to have an understanding with your landlord that is only verbal in nature. Would we recommend that? No, simply because commercial leasing concerns, in addition to risk management for the landlord, very real concerns over the various elements that we call rent. And of course we have base rent and then we have additional rent. And misunderstandings can be expected in any verbal leasing arrangement with the landlord.