What Is a Memorandum of Lease?
A memorandum of lease or notice of lease is a short, recordable instrument used to place third parties on notice that there is a leasehold interest affecting real estate. A memorandum of lease outlines certain terms of an underlying lease agreement, including the names and addresses of the parties, a description of the leased premises, the term of the lease and a description of any terms that may impact the title to the real estate, such as purchase options or extension options. Typically, a memorandum of lease does not disclose confidential or proprietary information pertaining to the financial aspects of a lease.
State and local laws provide information about what should be included in a memorandum of lease to create an effective and recordable document. Typically, laws require a memorandum of lease to be signed and notarized by both landlord and tenant. After a memorandum of lease is properly executed by both parties, it is recorded with the local register of deeds office, similar to how a mortgage or deed of trust is recorded. It will then appear in the property’s chain of title and provide constructive notice of the tenant’s rights and interests in the leased property. A memorandum of lease needs to be recorded. If not recorded, a tenant risks potential adverse title changes without the tenant’s knowledge.
Protecting Your Rights
The importance of recording a memorandum of lease varies from state to state. In the United States, at least 17 of the 50 states have a recording requirement surrounding leases. For example:
- In North Carolina, buyers of property are not bound by leases of longer than three years unless a notice of lease has been recorded per N.C. Gen. Stat. § 47-18.
- In Maryland, leases with terms of more than seven years are not enforceable by a tenant unless a notice of lease is recorded per Md. Code Ann., Real Prop., § 3-101(a) (2023).
- In Indiana, no later than 45 days after lease execution, a lease with a term longer than three years must be recorded or a memorandum of lease must be recorded or the lease is void against any subsequent purchaser, lessee or mortgagee per IC Section 32-31-2-2.
- In Florida, leases with a term of one year or more are not enforceable against any creditors or subsequent purchasers unless a notice of such lease is recorded per Fla. Stat. § 695.01.
In many other states, recording a memorandum of lease is not required by law; however, it is highly recommended as a best practice.
Updating and Terminating
After a memorandum of lease is recorded, it is important to continue to update the document as any revisions are made to the underlying lease. For example, if the original lease term is modified, if a renewal term is added or if an exclusive use option is later granted, it is important to amend the original memorandum of lease to reflect such changes.
Just as tenants will request a memorandum of lease be recorded to protect their leasehold interest, it is equally as important for landlords to execute and record a termination of a memorandum of lease, when applicable, to avoid a cloud on the title.
Practical Takeaways
- Whether a memorandum of lease can be recorded is often negotiated in a lease agreement. Preserve your rights first and foremost in the body of the lease agreement.
- The importance and legal requirement of recording a memorandum of lease will vary based on state law requirements, the length of the lease term and whether the lease grants any additional rights to a tenant.
- Best practice for a tenant is to record, and amend as necessary, a memorandum of lease for every lease agreement and subsequent amendment.
- Best practice for a landlord is to prohibit the recording of a memorandum of lease or ensure a termination of the memorandum of lease is recorded at the time the lease terminates to avoid a later cloud on the title.
If you have any questions, please contact:
- Sadie Zurfluh at (414) 721-0472 or szurfluh@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
