Memorandum of lease: Overview, definition, and example
What is a memorandum of lease?
A memorandum of lease is a brief, summary document that outlines the key terms and conditions of a lease agreement. It serves as a public record to provide notice of the lease's existence, without including all the detailed provisions of the full lease. This document is often filed with a government office, such as the county recorder's office, to officially register the lease and provide third parties with notice of the leaseholder's rights to the property. It typically includes the names of the parties, the property description, the lease term, and other essential details, but omits more detailed provisions like rent amount, payment schedule, and obligations.
For example, when a business leases commercial property, the memorandum of lease may be recorded to notify others that the business has a legal right to occupy the space for a set period.
Why is a memorandum of lease important?
A memorandum of lease is important because it provides a simple way to publicly record the existence of a lease without disclosing all of its detailed terms. It serves to protect the interests of both the landlord and the tenant by putting third parties on notice about the leasehold interest. This can be useful in situations where the property might be sold, refinanced, or involved in legal disputes, as the memorandum ensures that the lease is recognized and enforceable.
For businesses and property owners, the memorandum of lease helps avoid conflicts over property rights and ensures that the leaseholder’s interests are protected, even if the full lease agreement is not available for public inspection.
Understanding a memorandum of lease through an example
Imagine a company renting office space in a commercial building. Rather than filing the entire lease agreement, the company and the landlord decide to file a memorandum of lease with the county clerk. This memorandum includes the names of the landlord and tenant, the address of the leased property, the term of the lease, and a statement that the tenant has exclusive rights to occupy the property for the specified period. This filing ensures that, should the building be sold, potential buyers or lenders are aware of the tenant’s rights and obligations.
In another example, a landowner leases a piece of agricultural land to a farmer. A memorandum of lease is filed with the appropriate governmental office, so that anyone reviewing the property’s title is aware of the existing lease, even if they do not have access to the full lease agreement.
Example of a memorandum of lease clause
Here’s how a memorandum of lease clause might appear in a contract:
"The Parties agree that a Memorandum of Lease shall be executed and filed with the [county/city] Recorder’s Office. The Memorandum shall include the names of the Parties, the address of the leased premises, the lease term, and other essential details of the Lease Agreement. A full copy of the Lease Agreement shall remain confidential and accessible only to the Parties involved."
Conclusion
A memorandum of lease is a summary document used to publicly register the existence of a lease agreement and notify third parties about the leaseholder's rights to a property. It provides an effective way to protect the interests of both landlords and tenants, while ensuring that others are aware of the leasehold arrangement.For businesses and property owners, utilizing a memorandum of lease helps prevent disputes and ensures that the lease is recognized by all relevant parties. For potential buyers, lenders, or other interested parties, the memorandum offers a simple and efficient way to verify the existence and key terms of a lease without accessing the full agreement.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.