TERMINATION OF LEASE Termination of a lease allows an agency to terminate its obligations of a lease prior to expiration. Careful consideration should be given to the consequences to the lessor of an early termination. In many cases, lessors spend funds at the beginning of the lease term to renovate space to an agency s specifications, and then must amortize these expenses over the term of the lease. In the event a lease must be terminated early, the bureau will work with the agency to find a substitute tenant for the space whenever possible. 1. Leases are generally terminated for one of three reasons: A. Space in a state-owned facility becomes available. When selecting tenants for state-owned space, the Bureau of Property Management gives priority to agencies currently occupying a state-owned facility and in need of expansion space. Agencies requesting space due to an expiring lease or new program requirements are targeted next to avoid terminating an active lease that might cause undue hardship to a private lessor. 1. Article XXI of the Standard Lease Agreement provides for termination of a lease based on state-owned space becoming available in the county specified in the lease agreement. 2. The lessor must be given 6 months notice prior to the termination of the lease under Article XXI. 3. The effective termination date is six months after the notice is given. B. Availability of Funds. Section XVIII of the Standard Lease Agreement addresses the availability of funds appropriated annually by the Legislature for lease purposes and/or the availability of funds through contract or grant programs. Should the agency decide to terminate a lease in accordance with the contingency provision contained in the lease, the termination must be based on an established methodology that can be defended and justifies termination of the lease. 1. The lessor should be notified as soon as possible when the agency determines a lease will be canceled due to loss /reduction of funding. Leases that are about to expire or exist on a month-to-month basis should be targeted for termination first. At least 24 hours notice, stating the reason for early termination, must be provided to the lessor. 2. The effective date is the date the funding stops or a mutually agreed upon date with the lessor. 2
C. Termination to occupy another privately-owned building: 1. In order to terminate a lease to occupy privately-owned space, there must be a clause in the original lease providing for such a termination. 2. For example, a month-to-month extension of a lease may be terminated by giving 15 days notice. 2. Preparing the termination notice. A. The agency will prepare a letter of lease termination in sufficient time to permit issuance prior to the advance notice time limit stipulated by the lease. B. This notice is to be sent by registered mail, certified return receipt requested. 3. Processing the termination notice. A. The termination letter must be signed by the agency s designated representative authorized to sign leases. B. Mail the notice as specified above, certified mail return receipt requested. C. After the certified mail receipt is returned, submit to DMS a cover letter, a copy of the termination letter, and a copy of the certified mail receipt. D. DMS will file the letter of termination and send an acknowledgment letter of filing to the Agency and the comptroller. LEASE CANCELLATION Cancellation of a lease is accomplished by mutual agreement of both the lessor and lessee or by the expiration of the lease. No previous DMS permission is required before canceling a lease. 1. Lease cancellation process: A. If lease has expired DMS will cancel the lease unless otherwise notified by the agency. B. If the termination is by mutual consent, have the Lease Cancellation Agreement completed and submit the agreement, with a cover letter indicating where staff will be relocated, to DMS. C. If the documents are technically correct, a letter of filing will be sent to the agency and the comptroller. 3
LEASE NO: MODIFICATION NO: STATE OF FLORIDA DEPARTMENT OF MANAGEMENT SERVICES AGREEMENT FOR CANCELLATION OF LEASE AGREEMENT WHEREAS, the Department of, Lessee, has previously entered into Lease Number, on, 20. for the term commencing, 20, which now terminates the day of 20,; the current Lessor being ; and WHEREAS, the Department has determined that the continued use of said space will no longer be required after. THEREFORE, in consideration of the mutual promises and covenants herein contained, the Lessor and Lessee do hereby agree to cancel and terminate the above Lease No.: and that the lease shall become null and void effective. 4
LEASE NO.: MODIFICATION NO.: IN WITNESS WHEREOF, the parties hereto have hereunto executed this instrument for the purpose herein expressed, this day of, 20. ANY MODIFICATION OF A LEASE AGREEMENT SHALL NOT BECOME LEGALLY EFFECTIVE UNTIL APPROVED/ACCEPTED BY THE DEPARTMENT OF MANAGEMENT SERVICES. Signed, sealed and delivered in the presence of: AS TO LESSOR Signed, sealed and delivered in the presence of: As to President, General Partner, Trustee Signed, sealed and delivered in the presence of: AS TO LESSEE APPROVED AS TO CONDITIONS AND NEED THEREFOR DEPARTMENT OF MANAGEMENT SERVICES General Services Manager, Bureau of Real Property Management, Director Division of Facilities Management ORIGINAL SIGNATURES REQUESTED ON ALL COPIES LESSOR, IF INDIVIDUAL (S): (SEAL) Print or Type Name (SEAL) Print or Type Name Name of Corporation, Partnership, Trust, etc.: By: ATTEST: Its President, General Partnership, Trustee Its Secretary LESSEE: STATE OF FLORIDA DEPARTMENT OF (SEAL) (SEAL) By: APPROVED AS TO FORM AND LEGALITY, SUBJECT ONLY TO FULL AND PROPER EXECUTION BY THE PARTIES GENERAL COUNSEL DEPARTMENT OF MANAGEMENT SERVICES By: Print or Type Name Print or Type Title Print or Type Name APPROVED AS TO FORM AND LEGALITY, SUBJECT ONLY TO FULL AND PROPER EXECUTION BY THE PARTIES GENERAL COUNSEL DEPARTMENT OF By: Print or Type Name APPROVAL DATE: APPROVAL DATE: FM 4061 (R05/04) 2 of 2 APPROVAL DATE: 5
CHANGE OF OWNERSHIP When ownership of a facility changes, the records of the agency, DMS and the comptroller must be changed. Lessors do not always notify the user agency of ownership changes. As soon as you gain knowledge of an ownership change, contact the new owners and request the required documentation. 1. Documents required for processing. A. Copy of warranty deed, quick claim deed or other instrument used to transfer the title. B. Disclosure statement executed by the new owner(s). C. Acknowledgment of Public Entity Crimes statement. D. Any additional information necessary to ensure proper delivery of rental payments to the new owner(s). 2. Processing a change of ownership. A. Obtain required documentation from new owners. B. Send this documentation to DMS. C. DMS will send a letter of acknowledgment of ownership to both the comptroller and the agency. CHANGE OF PAYEE Lessors sometimes assign rental payments to a management firm, financial institution or to other individuals. The request to change the payee must be signed by the lessor (person or entity that controls the property). The process of changing payees is very simple. 1. A letter from the lessor setting forth the essential facts regarding the assignment of rental payments is all that is required for this process. A. The letter must be signed by the lessor. B. The letter must contain the name and mailing address of the new payee. 6
2. Process for changing payee. A. The Lessor s letter is forwarded to DMS with a cover letter. B. If documentation is in order, DMS will send a letter of acknowledgment to the agency and the comptroller. TENANT-AT-WILL STATUS A tenant-at-will status is one in which the period of the lease term has expired and the user agency continues to occupy the facility without the benefit of a lease but with the written approval of the lessor. This situation should be corrected as soon as possible as it is a violation of subsection 255.25(2), Florida Statutes, and could be a point of audit criticism by the Auditor General. 1. Tenant-at-will situations occur for various reasons. A. Difficulties encountered in obtaining replacement space through the competitive bid process and lease has already been extended the allowable 11 months. B. Delays in the construction of the replacement beyond the extension period. C. An extension modification was not executed prior to the expiration of the lease. 2. Requests to pay rent for tenant-at-will situations must be certified to the Comptroller by the Bureau of Property Management before issuance of a rent payment warrant. 3. Approval for a tenant-at-will payment is contingent upon the terms and conditions of the original lease not being altered. 4. Requests for payments for tenant-at-will leases which are not for an entire month are to be made after the rental period covered has ended. 5. To calculate the rental rate for a partial month: A. Divide the monthly rental by the number of days in that month and round to the nearest cent, this is the daily rate. B. Multiply the daily rate by the number of days the space was occupied during the rental period, this is the amount due. 6. If payment for an entire month is being requested, the request may be forwarded to DMS on or about the 15th of the month. 7
7. Preparation and processing of tenant-at-will payments. A. Prepare the rental invoice for payment. B. Have a voucher prepared by your fiscal office. C. Prepare a Request for Payment of Rental as a Tenant-At-Will and Authorization, form FM 4112. D. Submit the original and three copies of the request, two copies of the voucher and rent invoice to DMS for review and approval. E. DMS will approve the request for payment when it is technically correct and will provide a copy of the approved request to the comptroller and the user agency. F. Upon receipt of the approved request, the agency will forward to the comptroller s office, the approved request, the original invoice, and the voucher, requesting a warrant. G. Upon receipt of the warrant, the agency will forward it to the lessor. 8
INSTRUCTIONS FOR REQUEST FOR PAYMENT OF RENTAL AS TENANT-AT-WILL AND AUTHORIZATION (1) Enter lease number. (2) Enter location of lease. (3) Enter the Department name. (4) Enter the Division name. (5) Give a brief explanation as to the reason this lease is in a tenant-at-will situation. (6) Enter the date the current lease expired. (7) Enter the current lessor's name exactly as it appears on the lease agreement or a document changing ownership, if applicable. (8) Enter the monthly rental rate. (9) Enter the time frame for payment. (10) Enter total payment amount. (11) Enter replacement lease number, if applicable. (12) Give a brief status of where the replacement lease is in the leasing process. (13) Provide an estimated date that the new lease will start and tenant-at-will is expected to end. (14) Lessee's authorized signee signs on this line. (15) Enter the title of the position of the individual designated to sign for the lessee. (16) Enter the date this form is being signed. 9
STATE OF FLORIDA DEPARTMENT OF MANAGEMENT SERVICES REQUEST FOR PAYMENT OF RENTAL AS A TENANT-AT-WILL AND AUTHORIZATION LEASE NUMBER: (1) LOCATION: (2) AGENCY: (3) DIVISION: (4) REASON FOR TENANT-AT-WILL STATUS: (5) THIS LEASE EXPIRED: / (6) / LESSOR: (7) MONTHLY RENTAL RATE: (8) TIME PERIOD FOR WHICH PAYMENT IS REQUESTED: (9) PAYMENT AMOUNT REQUESTED: (10) REPLACEMENT LEASE NUMBER: (11) STATUS OF REPLACEMENT LEASE: (12) ESTIMATED DATE OF OCCUPANCY OF REPLACEMENT SPACE: (13) REQUESTED BY: (14) APPROVED: (15) POSITION DATE: (16) ATTACHMENTS: INVOICE VOUCHER FM 4112 (R5/95) BUREAU OF PROPERTY MGMT DIVISION OF FACILITIES MGMT DATE 10
PLEASE NOTE YOUR COMMENTS AND SUGGESTIONS AND SEND THEM TO DMS CHAPTER 8 Lisa Lehman Department of Management Services Bureau of Property Management Building 4030, Suite 315-4050 Esplanade Way Tallahassee, FL 32399-0950 11