Distribute Proprietary Lease Changes

Andrew P. Brucker, Partner, Armstrong Teasdale

For minor changes. If it’s just an amendment, send out a short one- or two-page replication of what was changed, and say, “Please staple this to your proprietary lease.” You have to do this because if you ever end up taking a shareholder to court for violating this change, a judge is going to say, “But they never got a copy.” 

When the change is big. We create a brand new lease called an “amended and restated lease.” It’s the new lease with all the provisions. And we ask everyone to re-sign it.

When the bank has the lease. If shareholders have financed their purchase, the bank has the original lease. So they should communicate with the bank, get the old lease and replace it with the new one. Banks don’t really care about changes unless it affects them in some way, so that could be a problem. But in most cases, you’re not going to make major changes everywhere. You’re going to change two, three or maybe four provisions.

Why bother with changes in the first place. Simple. Times change, and provisions need to be updated every five or 10 years.