In one sentence
A short recorded document giving public notice of a lease without disclosing its full terms.
The longer version
Rather than record an entire lease, parties record a memorandum noting the lease's existence, parties, and term. It protects the tenant's interest of record while keeping economics private.
Memoranda matter to lenders because they affect title and priority, and they intersect with SNDAs on major leases.
Common questions
- What is a memorandum of lease?
- A short recorded document giving public notice that a lease exists and its key terms, without disclosing the full lease.
- Why record a memorandum of lease?
- To protect the tenant's rights against later purchasers and lenders by putting them on notice, especially for options and rights of first refusal.
- Why does a recorded memorandum matter to a lender?
- Because a recorded lease interest may have priority over a later mortgage unless subordinated, which is why lenders review them against the title commitment.
Keep reading
- The commercial loan closing checklistWhat goes on the list and who owns each line.
- The due diligence checklist, built to be runChecklists as systems, not documents.
- The commercial loan closing processThe five stages from term sheet to funded.
- Commercial loan softwareWhere this sits in the lending stack.