Real Estate Leasing: Missouri Mark Murray, Armstrong Teasdale LLP

Transcription

1 Real Estate Leasing: Missouri Mark Murray, Armstrong Teasdale LLP This Article is published by Practical Law Company on its PLC Law Department web service at A Q&A guide to real estate leasing law in Missouri. Execution and Enforceability 1. Describe any formal requirements for the execution of a lease. In particular specify if: Witnesses are required. Acknowledgments are necessary. Countersignatures are enforceable. There are any homestead law requirements. There are any other important requirements in your state. Other Requirements There are no other relevant requirements. 2. Must a memorandum of lease (or any other instrument be recorded for a lease to be enforceable against third parties? If so, must an amendment to a recorded memorandum of lease be recorded if there is a further (material or non-material amendment to the lease? An instrument in writing that conveys real estate is valid only between the parties of the lease (or those with actual notice of it until deposited with the recorder (Mo. Rev. Stat (2010. Any material term, like an option to purchase, should be included in the memorandum of lease or an amendment to the memorandum of lease. Witnesses No witnesses are necessary for the execution of a lease. Acknowledgments Leases do not need to be notarized. Countersignatures Leases are frequently executed in counterpart, though there is not much law on the enforceability of countersignatures in Missouri. Homestead Laws Missouri s homestead law is not particularly relevant to commercial or residential leasing transactions. 3. Provide the statutory form of acknowledgment for: An individual. A corporation. A limited liability company. A limited partnership. A trustee. Individual SS. On this day of [MONTH], [YEAR], before me personally appeared [SIGNATORY NAME], to me known to

2 FMLA Real Estate Employer Leasing: Coverage Missouri and Employee Eligibility Checklist be the person described in and who executed the foregoing instrument, and acknowledged that [he/she] executed the same as his free act and deed. Corporation On this day of [MONTH], [YEAR], before me appeared [SIGNATORY NAME], to me personally known, who, being by me duly sworn did say that [he/she] is the [SIGNATORY TITLE] of [CORPORATION NAME], a [STATE] corporation, and that the seal affixed to the foregoing instrument is the corporate seal of said corporation, and that said instrument was signed and sealed in behalf of said corporation by authority of its board of directors, and said [SIGNATORY NAME] acknowledged said instrument to be the free act and deed of said corporation. Limited Liability Company SS. SS. On this day of [MONTH] in the year [YEAR], before me, [NOTARY NAME], a in and for said state, personally appeared [MANAGER/MEMBER NAME] of [COMPANY NAME], known to me to be the person who executed the within [TYPE OF DOCUMENT] in behalf of said limited liability company and acknowledged to me that [he/she] executed the same for the purposes therein stated. Limited Partnership On this day of [MONTH] in the year [YEAR] before me, [NOTARY NAME], a in and for said state, personally appeared [SIGNATORY NAME] of [PARTNERSHIP NAME], known to me to be the person who executed the within [TYPE OF DOCUMENT] in behalf of said partnership and acknowledged to me that [he/she] executed the same for the purposes therein stated. Trustee SS. SS. On this day of [MONTH], in the year [YEAR], before me [NOTARY NAME], a in and for said state, personally appeared [SIGNATORY NAME], [SIGNATORY TITLE] known to me to be the person who executed the within [TYPE OF DOCUMENT] in behalf of [PUBLIC CORPORATION/AGENCY/POLITICAL SUBDIVISION/ESTATE NAME] and acknowledged to me that [he/ she] executed the same for the purposes therein stated. 2

3 Disclosures, Certifications and Implied Uses Tenant Renewal There are no statutes that would require a landlord to allow its tenant to renew its lease if the lease is silent on renewals. Options, rights of first refusal and automatic renewals are common in Missouri and may be included in the terms of a lease. Early Termination Members of the armed services may terminate leases early in certain limited circumstances (Mo. Rev. Stat (2010. The Missouri Revised Statutes provide termination methods for unwritten leases, the most common of which is the month-tomonth lease (Mo. Rev. Stat. ch. 441 (2010. Either party may terminate an unwritten month-to-month lease with one month s prior written notice (Mo. Rev. Stat ( Are there any statutory or legal disclosures required by the landlord or the tenant either at the beginning or end of the lease term? Are there any compliance certificates the tenant may request from the landlord? 7. Is the landlord required to provide the tenant with a notice before the effective date of a renewal when the lease term automatically renews? Missouri law does not mandate any general disclosures or provide any compliance certificate requirement for commercial leases. Missouri law does require disclosure of whether the property was used for the production of methamphetamine and, with respect to residential property, Federal law requires various lead disclosures. A landlord is not required to provide notice for automatic lease renewals. It is, however, widespread practice for the landlord to send out renewal notices even if the renewals are automatic. Rent and Security Deposits 5. Is a lease deemed to include an implied warranty of fitness for intended use? Commercial leases do not contain an implied warranty for intended use. Residential leases carry with them an implied warranty of habitability. Term, Renewal and Early Termination 8. Are there any legal restrictions on: How much rent the landlord may charge? Whether certain operating expenses (or other additional rent may be passed through to the tenant? The Missouri statutes are silent on rent restrictions and on the landlord s ability to pass operating expenses through to its tenants. Counties and cities are prohibited from restricting rent, except for certain specific exceptions (Mo. Rev. Stat ( Are there any legal restrictions which: Limit the maximum term of a lease (including any renewals? Require the landlord to allow the tenant to renew its lease? Allow the tenant to terminate its lease before the express expiration date? Limit on Maximum Term In general, a written lease agreed on by both parties is not subject to a maximum term if a term is defined in the lease. Exceptions typically involve situations where the parties have not formalized in writing the intended term (Mo. Rev. Stat. ch. 441 ( For security deposits: Must the landlord maintain security deposits in a separate bank account for each tenant? Must a security deposit be in an interest bearing account? Must the landlord pay all interest earned to the tenant or can the landlord retain a percentage of the interest earned as an administrative fee? There is no requirement that security deposits be placed in separate accounts for each tenant or in an interest bearing account. The statutes are silent about who owns any interest earned. 3

4 Real Estate Leasing: Missouri Property managers and certain landlords, however, are subject to Missouri Real Estate Commission regulation on these matters (Mo. Rev. Stat (2010. If a licensed broker is managing the property, however, the broker must keep separate accounts for each tenant s security deposit, unless the fee owner agrees otherwise (Mo. Code Regs. Ann. tit (2009. Transfer Taxes and Other Taxes If the lease is silent, a tenant bound by a lease for a term of greater than two years may assign the leased property to another without the landlord s consent (Crestwood Plaza, Inc. v. Kroger Co., 520 S.W.2d 93, 96 (Mo. App A landlord may circumvent this default rule by including a provision in the lease that requires the landlord s consent for an assignment of the lease or a sublease of the premises. In general, a tenant bound by a lease for a term of less than two years may not assign its lease without the landlord s consent (Mo. Rev. Stat ( Are any state or local transfer taxes triggered when a lease is signed or on the later assignment of a lease? If so, please specify the: Rate for the tax and how is it calculated. Returns required. Timing for filing the returns and paying the taxes. There is no transfer tax in Missouri. 11. Are state or local transfer taxes triggered when the tenant undergoes a (direct or indirect transfer of its ownership interests? In particular, please specify the: Percentage of ownership interest that triggers the taxes. Rate for the taxes and how they are calculated. Returns required. Timing for filing the returns and paying the taxes. Missouri does not have a transfer tax. 12. Describe any state or local taxes (rental or other that the landlord must collect from the tenant? There are no state or local taxes the landlord must collect from the tenant. Typically, a landlord passes through to the tenant its proportionate share of real estate taxes. Assignment, Financing and Transfers 13. Describe any laws allowing the tenant to assign its lease, or sublease its premises, without the landlord s consent. Is a reasonableness standard implied when the lease is silent on whether the landlord s consent to an assignment or sublease may be reasonably or unreasonably withheld? There is no Missouri law giving a tenant the right to assign its lease, or sublease its premises, if the lease expressly forbids the assignment of the lease or subleasing of the premises. 14. If the lease does not expressly define the term assignment and there is no other express restriction in the lease to the contrary can the: Tenant s corporate ownership interests be freely transferred without the landlord s consent? Tenant freely place a lien on its leasehold interest, or pledge its corporate ownership interests, in connection with a financing without the landlord s consent? Transfer of Ownership Interests A general prohibition against assignments of the lease does not prohibit the transfer of the tenant s ownership interests. The lease term for assignment must be specifically defined in the lease to expressly include a restriction on the tenant s ability to freely transfer its ownership interests without the landlord s consent. Security Lien or Pledge of Ownership Interests The tenant may grant a lien on its leasehold interest, or pledge corporate ownership interests, without the landlord s consent, unless there is an express prohibition in the lease. 15. When a lease requires a landlord s consent for an assignment and defines the term assignment to include a transfer of the tenant s corporate ownership interests, would an indirect transfer of the tenant s interests trigger the landlord s consent requirement? The landlord s consent would not be required, unless there is an express provision in the lease that prohibits the transfer of the indirect ownership interests in the tenant. 16. Is the tenant/assignor deemed released from future liability under the lease when the lease is silent on whether the original tenant will be released in the event of an assignment? The assignment of a lease does not release either the original tenant or any subsequent assignor tenant, unless there is express release language in the lease, or in any other document, such as a deed of assignment. 4

5 17. Describe any restrictions on the landlord s ability to transfer the real property subject to the lease. Does this transfer affect the tenant s rights or obligations? There are no statutory restrictions on the transfer of real property subject to a lease. The landlord does not need to obtain the tenant s consent to transfer its property, unless there is an express provision in the lease. The tenant s rights and obligations typically are not affected by a transfer of the landlord s interest, unless there is an express provision in the lease providing otherwise (Mo. Rev. Stat (2010. Remedies 18. If a tenant breaches the lease: Are there any implied remedies available to the landlord, such as the acceleration of rent? Is there a limitation on the landlord s ability to exercise self-help? Is there a common form of an eviction proceeding and, if so, what is the typical length of time for the proceeding? Are there specific mechanisms for expedited remedies, such as waiver of jury trial or arbitration? Is the landlord required to mitigate its damages without an express obligation to do so? Eviction Proceeding Evictions are typically filed as either: Unlawful detainer actions, which typically take eight to 16 weeks (Mo. Rev. Stat. ch. 534 (2010. Rent and possession actions, which typically take four to eight weeks (Mo. Rev. Stat. ch. 535 (2010. Both actions are expedited, however, tenant may contest these actions which would cause delays. Expedited Remedies A landlord has standing to initiate an expedited eviction proceeding in specific statutorily defined situations (Mo. Rev. Stat (2010. Primarily, these situations involve emergencies or drug-related criminal activity and are unrelated to any lease provisions (Mo. Rev. Stat (2010. Mitigation of Damages A landlord does not need to mitigate its damages unless the lease expressly requires mitigation of damages by the landlord. If a landlord decides to mitigate its damages, however, the landlord must do so in good faith. Implied Remedies Missouri law recognizes three landlord remedies for a tenant s default. The landlord can either: Do nothing and attempt to collect the rent with each passing month. Terminate the tenant s possession to the premises and attempt to re-let the premises. Terminate the lease. Other remedies specified in the lease may or may not be enforced by the courts. Self-help Self-help is a risky strategy for a landlord and can expose the landlord to civil and potential criminal liability. Practical Law Company provides practical legal know-how for law firms, law departments and law schools. Our online resources help lawyers practice efficiently, get up to speed quickly and spend more time on the work that matters most. This Article is just one example of the many resources Practical Law Company offers. Discover for yourself what the world s leading law firms and law departments use to enhance their practices. Contact Us Practical Law Company 747 Third Avenue, 36th Floor New York, NY plcinfo@practicallaw.com Use of PLC websites and services is subject to the Terms of Use ( and Privacy Policy (