Lease Agreement Addendum for LA Industrial Company

Business Mediation & Lease Agreement Addendum for an Industrial Company

Applicant: Industrial Company

Company type: Import/Export, City of Industry

Applying For: Lease Agreement Addendum

Time: 1 Week

Challenges:

  • Tensions were high between the company and the landowner
  • Extremely low budget for business mediation
  • The company required the space to continue operations, they were afraid of losing everything
  • Landlord wanted them out so they could sign more long-term leases

BACKGROUND OF THIS LEASE AGREEMENT ADDENDUM CASE

Building a business in America is one of the adjacent tenets of the American Dream. But building and running your own business can be a daunting task. You are constantly faced with changing markets, shifting patterns, and new situations that you can’t be prepared for because they’re too unique to foresee coming ahead of time. However, having your own business can be one of the most rewarding accomplishments of one’s lifetime. You gain your independence, you are regularly rewarded for your hard work, and you have something to be proud of. Thus, it can be extremely frustrating when something as simple as a lease agreement threatens to undo literal years of blood, sweat, and tears.

That is where we found our client, an Import/Export company in the City of Industry, California. As the end of their lease agreement with their current landlord was nearing, our client wanted to extend the agreement by a couple of months. The landlord preferred that they just leave so that instead of uncertainty about when his property would become available again, he could just start showing it knowing exactly when it would be empty again. The landlord also preferred to have a long term lease to remove the uncertainty of a potentially vacant property. The company did want to move to a new location; however, it was not prepared to move that quickly and it needed the current space for a variable amount of months before moving into a new space. Our client and their landlord had been in negotiations over the lease agreement for over six months before they decided to bring in outside mediation to resolve their disagreement.

CHALLENGES IN THIS LEASE AGREEMENT ADDENDUM CASE

Unfortunately, both sides let tensions build and negotiations get frustrating before deciding to bring in a business mediator. When people allow emotion to run too far into their business dealings, it becomes difficult for either side to see what should be a reasonable answer in front of them.

Another problem of waiting to bring in a mediator was that it restricted both the time and budget involved. Both sides needed a resolution quickly and for very little money, given the uncertainty of the entire situation. However, because our firm is well-versed in mediation and regularly serves as corporate counsel, we were confident that we could iron out an agreement that everyone would be happy with.

“What we had here was a case of both sides not knowing what they didn’t know. One side, the company, didn’t know how long they would want to stay. The other side, the landlord, didn’t know what to offer to make it fair for both sides. So we started with consulting with our client, the company, which we did a few times, and then we had a consultation with both parties involved. From there, it was simply about putting reasonable numbers in front of businessmen, something they deal with on a regular basis.” – Joseph Tsang, Attorney

KEYS TO SUCCESS

 

We began by consulting our client, the company, to find out their wants and needs. From them we learned how much this lack of agreement and the threat of eviction wasn’t just scary, it was life-threatening to their business. They needed the warehouse they were in to survive. They had physical goods that needed storage. They knew they would be moving into a different space eventually, but they could not guarantee when that would be.

What also happened when we consulted with our clients was we came to understand that a lot of what was going on was just a simple misunderstanding of goals between the two parties. The landlord was afraid he was going to have an interminable situation on his hands, a company that would want to negotiate every few months to extend their lease in relatively small increments. The landlord wanted not only to increase the lease agreement but would naturally want people who would agree to longer overall commitments. The company did have a variable amount of time they wished to spend in the landlord’s space, but it was always their intention to leave soon, allowing the landlord the freedom that he wanted.

When we got both parties to sit down for a group consultation, we made sure we had an acute understanding of what both parties wanted, what their goals were, and what their major issues were. That helped us strip away the emotion and the tension that had been building for more than half a year. Part of our mediation services is simply building trust with all parties to show that we are not here to build a win-lose scenario, we are here to help everyone come out winners. Once we were able to prove to the landlord that we would be fair in our draft of the lease agreement addendum, much of the tension melted away.

CASE OUTCOME: A FAIR LEASE AGREEMENT ADDENDUM

We were able to draft a document that extended the original agreement by a few months, the time that our client would definitely need the space, but provided escalators in the cost of the monthly agreement.  If our client tried to stay in that space longer than the new agreement would allow, the escalators would take effect. The escalators were an incentive for the landlord because the escalators essentially allowed him to charge more than he could charge at a monthly rate, even to new tenants. Once we were able to strip away the emotions and tensions of the situation and put a lease agreement addendum with concrete numbers in front of both sides, the mentality of business took over. Both sides negotiated, changed numbers as they saw fit, and were able to agree in less than a week after hiring our firm. Our client’s import/export company was safe to continue operation, and everyone was pleased with the outcome.

Business contracts and mediation are part of our corporate counsel services. If your business is in negotiation and in need of a new business contract, our firm is here to help. Contact us to schedule an appointment to talk about your business today.

 

Original Content

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