Recording Leases


#1

Should we record all of our leases at the courthouse?

Thank You

Garrett


#2

This is a very tricky question. Yes, you should. But don’t get yourself in legal trouble. Consult with your attorney to make sure that you have the correct recording format on your lease, and that you have sufficient approval from the lessor to record it. You could create legal liability for yourself if you record the lease without the lessor’s permission. Theoretically, if you record it without their permission, and it screws up a later sale of the property, they could sue you for damages.

Many lenders now require that the lease be recorded, so you need to get a handle on this immediately. Make sure you know what it takes to get it recorded (notary, etc.) and what you need in the lease to prove you have the lessor’s permission.


#3

I would suggest that you don’t record your actual lease, but a memorandum of your lease.

Companies in our area made a mistake of recording the actual lease that shows the Lessor’s out clauses (i.e. development clauses, etc). This allowed other companies to “jump the lease” or help the landowner get out of the lease and then allow the new company to build a sign on the property. In the case where a memorandum is only recorded, you will not have to provide the actual lease to anyone unless they have a valid interest in the property, such as a contract to purchase. Sad to say they lost several locations because of this.

This brings up an ethical dilemma for your business, but of course cover your butt on this and just record a memorandum of lease.

To cover your tail about recording, always make sure to include in the lease that you will be allowed to record a memorandum of your agreement at the local register of deeds. This is not legal advice, so consult your local attorney to make sure this should satisfy the requirement of allowing you to record the agreement.


#4

Great input. Some banks may require you to record the actual lease, but if you can get away with it, recording a memorandum is a better option.