Risk Involved in Signing “Redlined” Lease

Q: The final draft of a lease I've just negotiated has all of the changes from my standard lease form highlighted by redlines. Rather than printing a “clean copy” of the lease, I'd like the tenant and me to sign the redlined copy so it becomes the official version of the lease. This way, I'll be able to easily spot the changes whenever I need to refer to the lease. Is there any risk involved with signing a redlined copy?

A: Think twice before signing a redlined copy of the lease. There may be a big risk. A redlined or marked-up version of a lease lets you easily spot changes, but that has a downside. It provides an easy “paper trail” of what you and the tenant negotiated. Although that might sound like a good thing, and it could help you in certain circumstances, it might hurt you in others. If you and the tenant get into a dispute, the highlighted additions and deletions might lead the judge to draw conclusions about the lease that he or she couldn't have done from a clean copy. Whether that helps or hurts you depends on the issue and how the judge rules.

For example, suppose the lease has a clause that says you won't be liable for any delays in completing construction at the tenant's space. The tenant crosses out that clause. You agree to the cross-out because another part of the lease protects you from liability in that situation. The tenant later sues you over construction delays. The judge examines the lease and notices the crossed out clause. He concludes that by agreeing to the cross-out, you were agreeing to accept some liability for delays in completing construction. Now you're in the undesirable situation of having to convince the judge otherwise.

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