Don’t Let Square Footage Numbers Lead to Disputes

Square footage and dimensions can easily become the focus of a dispute, which is why some owners try to keep them out of a lease or attached floor plans. If you have to include square footage or dimensions in certain circumstances—for example, if you’re dealing with a highly desirable prospective tenant that demands this inclusion, or the fixed rent or a rent escalation is governed by a formula that includes the square footage number, make protective changes to two standard lease clauses. These changes can help shield you from a misrepresentations claim by the tenant if the square footage or dimensions you include are wrong.

• Change #1: Agree to agree on measurements. When describing the premises in the lease, say that the space is deemed to be a certain square footage for purposes of the lease. This wording means that you and the tenant have agreed to consider the space a certain size, no matter what the actual size is. If the space later turns out to be smaller than the agreed upon size, the tenant can’t claim you misrepresented the square footage.

• Change #2: Use safeguard in merger clause. Even with the “deemed” language written into your lease, a tenant may still accuse you of making an oral misrepresentation—that is, promising in conversation that the deemed numbers you put in the lease are, in fact, accurate measurements. That’s why you should consider safeguards against oral misrepresentations claims or claims that the tenant relied upon other pre-lease information. Add the following language to the standard “merger” clause in the lease. (That’s the clause which says that the lease is a complete integration of all prior agreements and that you haven’t made any representations or promises outside the lease.) Add that you haven’t made any representations or promises as to the size of the space or the building. Then ask the tenant to acknowledge that it’s had a chance to measure the space—and that the stated square footage in the lease will be binding.

For Model Language you can use to make these sections of your lease less likely to give rise to lawsuits over square footage, see “'Deem' the Square Footage Numbers in Your Lease,” available to subscribers here.