By April Royal, Birchstone Residential
FWAA members benefit from strong economic development and job growth. FWAA-area universities Texas A & M, Tarleton, TCU, and UTA all recently announced expansions. Lockheed Martin and the Alliance corridor continue to thrive. FWAA-area elected officials promote pro-business policies and encourage job growth through tax incentives and public-private partnerships. FWAA members are blessed to own and operate housing in a vibrant, forward-looking region.
Job growth and expansion bring employee relocations and the demand for corporate leases. A few FWAA members specialize in corporate leases; however, most FWAA members have not encountered corporate lease arrangements. This month’s article is a resource if, in the future, your company considers offering corporate leases. Per usual, REDBOOK Blues does not provide legal advice. If you need legal advice, contact one of FWAA’s member attorneys.
Houston-area TAA member attorney Howard Bookstaff (bookstaff@hooverslovacek.com) authored an outstanding article on corporate leases for the Houston Apartment Association’s publication Abode. Below are key takeaways from Bookstaff’s article.
TAA Lease—The TAA Lease does not contemplate “corporate” leaseholders. It states that this lease is between “Us” (a TAA member) and “You” (an individual or individuals). The “You” is not a company.
Addendum That—To overcome the above “you” challenge, Bookstaff recommends adding an addendum to the TAA Lease signed by the corporate representative that makes the corporate entity the “resident.”
Who—It is critical that FWAA members who offer corporate housing options know what entity they are entering into a lease contract with: a corporation, partnership, LLC, sole proprietorship, etc. It makes no sense for a sole proprietor to put a lease in their business name.
Foreign or Domestic—Whether it is a Texas-based company (domestic) or a company organized outside of Texas (foreign), make sure that you verify that it is registered with the State of Texas and authorized to operate in Texas. The Texas Secretary of State’s office will have this information. More importantly, registered companies will have a registered agent and address to send communication.
Who Is Liable—Be clear about who is liable. Business entities go bankrupt, dissolve, go out of business, etc. Landlord-tenant relationships are great until they are not. If a resident in a corporate lease damages the unit, causes a fire, violates the lease, etc., it is vital that the resident also be held accountable.
Signature—An authorized representative from the business entity, not the resident, should sign the lease. Again, if it is a sole proprietorship, a standard TAA Lease should be used.
Who Is Occupying—This seems obvious, but you must know all occupants. You can list them individually under the occupant section of the TAA Lease or on a separate addendum.
Criminal Background—Be sure to perform criminal background checks on all occupants/residents eighteen years of age and older. Deny occupancy to anyone who does not meet your criminal screening criteria.
More Than One —Some corporate leases will be for more than one unit. If you lease more than one unit to a corporate entity, consider staggering the lease termination dates so that you do not simultaneously have to manage multiple lease renewals.
Bottom Line — As the Fort Worth area continues to attract businesses, the demand for corporate lease arrangements will increase. With a little knowledge and common sense, corporate leases can be a lucrative addition to FWAA members’ portfolios.
April Royal, Birchstone Residential, is FWAA’s 2024 Treasurer and Government Affairs Committee Chair.
