Don’t Lease to Government Tenants Until They Get Required Approvals

Don’t sign a lease with a federal, state, or municipal government agency unless and until it gets all of the approvals necessary to enter the lease. If the approvals aren’t all in place, the signed lease may turn out to be void or voidable by the government tenant. 

Many government agencies aren’t allowed to sign leases unless another government agency, such as a comptroller’s office or legal department, approves the lease. In some states, there must be a public notice and maybe a public hearing before a government lease may be approved. 

That’s why it’s crucial for landlords who lease to government agencies to determine what, if any, approvals the proposed tenant needs to enter into a binding lease. The landlord should then insist that the agency secure all of those necessary approvals before the lease is signed. If waiting for approval would cause undue delay, the lease should list all of the specific approvals required and a deadline for the tenant to secure them. Also, specify that the tenant’s failure to secure the approvals by the deadline is grounds for the landlord to terminate the lease, unless the landlord chooses in its sole discretion to extend the deadline.