Recently, in reviewing a lease agreement, the name of the landlord did not look right. We checked to make certain we had the precise name of the landlord, which turned out to be a limited liability company formed under Florida law. The problem was that instead of using the name of the LLC as the landlord, a fictitious name under which landlord did business was used instead.
Whether a person is the landlord or tenant in a commercial real estate lease, knowing the precise identity of the other party is essential. Use the party’s legal name instead of a fictitious name. Noting the taxpayer identification number of both landlord and tenant is also advisable.
Make Sure the Signer has Authority
Know whom you are dealing with not only on the proper name of the legal entity, but also the name of the individual that must sign the lease to bind the legal entity as tenant or landlord. When dealing with a legal entity, know the individual signing the lease agreement has the authority to sign on behalf of the legal entity. To confirm identity and proper authority, an Incumbency Certificate is sometimes used. An Incumbency Certificate is signed by the officer that has the authority to sign the lease. From the same Incumbency Certificate, another officer attests the officer is employed by the legal entity, verifies the officer status of the individual that will sign on behalf of the legal entity and states the legal entity does not require another person to join in signing the lease. Alternatively, you may obtain a resolution signed by the secretary or another officer of the legal entity stating the information noted above and that the operating agreement of the LLC or the articles of incorporation, bylaws, or other documents associated with the corporation do not require more than one officer to sign the lease and bind the legal entity. In large companies, whether an LLC or corporation, if timing is critical in getting the Incumbency Certificate signed, an incumbency certificate might be the best way to go.
Consider Adding a Guarantor
If the tenant is a closely held corporation or LLC, landlord may require a guaranty from the members or shareholders. The landlord will want to make certain it has the full name of the guarantors spelled correctly, their mailing address, telephone number, email address, and the persons’ Social Security numbers. Often people are reluctant to provide Social Security numbers. If that is the case, obtain a copy of the person’s driver’s license.
Finding out the name of the actual landlord or tenant may seem simple, but I am always amazed how often we see a fictitious name being used instead. Before you sign your lease, find out who you are really dealing with.
This article is for general information only and is not intended to provide legal advice. If you have questions or concerns about your commercial lease, please call us at 813-852-6500 for a free 30-minute consultation with a commercial real estate attorney.