Will your Arizona LLC be a landlord or a tenant of Arizona real estate? If so, it needs to sign a written lease. If the lease is between related parties it is particularly important that the parties sign a written lease because the lack of a written lease would be an adverse fact if somebody filed a lawsuit to pierce the veil and hold the member of the company liable for a company debt.
If the lease is not between related parties a written lease is also very important to prove the terms and conditions of the lease if either party sues for breach of the lease or to collect unpaid rent.
Take care that your lease is appropriate for the type of property and that it is written specially to comply with Arizona landlord tenant law. Don’t use a residential lease for commercial property. Don’t use a single family residential lease for premises in a multi-unit property.
Whenever you are paying or receiving a lot of money for rent you should have an experienced real estate attorney who represents your interests review the lease. I once had a doctor call me and confess that he made a big mistake when he went to the landlord’s office to review a commercial office lease I had reviewed and negotiated for him. The doctor was a key tenant in a new medical office building being built by a hospital. After extensive revisions of the lease it was ready to be signed.
When the doctor went to the landlord’s office to sign the lease the landlord asked if it could change one word in the lease. The doctor said ok. The landlord changed the term “net square feet” to gross square feet.” Changing this one word cost the doctor $35,000 over the term of the lease. Rent was charged on the number of square feet, but instead of measuring the footage from the interior of the walls and excluding HVAC areas (net square footage), the footage was measured from the exterior of the walls of the premises and included HVAC areas. The result of changing this one word caused the total footage to be about 12% more than it would have been if the measured using the net footage.
If your LLC needs a lease reviewed or prepared, we recommend you hire us. Richard Keyt and his son Richard C. Keyt are Arizona real estate attorneys. Richard the father has been an Arizona real estate lawyer since 1980. He has represented, buyers, sellers, landlords and tenants in all types of real estate transactions involving relatively small dollar amounts and multi-million dollar deals. The largest transaction Richard worked on was a purchase of Arizona real estate for $60 million.
If you or your LLC owns real estate that is leased or will be leased to your LLC you must have the landlord and tenant enter into a written lease for the premises. Without a written lease and a resolution of the members approving the lease the IRS could re-characterize the rent payments as distributions and prevent the LLC from deducting the rent payments.
To hire the Keyts to create a lease between related parties for $347 do the following:
- Go to our secure online webstore and pay for your lease.
- Complete our online lease questionnaire.
If you have questions about Arizona leases call Richard C. Keyt (480-664-7472). We don’t charge for answering questions about real estate leases.