Set Limits for 'Nightclub' Use to Avoid Ambiguities, Disputes

If you want to rent space in your building to a tenant for use as a nightclub, add language to the lease that clearly limits which activities or events are—or aren't—permitted at the nightclub, says New York City attorney A. Barry Levine. Otherwise, the tenant could stage events in the nightclub that you never expected or wanted, he notes. For example, while you may think the tenant will allow only musical and comedy performances at the nightclub, the tenant might stage sporting events there, too. But sporting events could cause problems for you—such as damaging your building and drawing large, unruly crowds—and lead to disputes between you and the tenant, warns Levine.

A New York City owner learned this lesson the hard way. Its lease said the tenant “shall use and occupy the demised premises for RESTAURANTS AND NIGHT CLUB and for no other purpose.” The tenant started holding public boxing matches in the nightclub. The owner asked the court to permanently block all future boxing matches at the nightclub.

A New York court refused to permanently block boxing matches. The court noticed that the lease permitted the tenant to use the space as a “nightclub,” but said that the term can be “somewhat ambiguous as many activities fall within the constraints of what are deemed nightclub activities.” For example, a nightclub may hold charity functions, comedy performances, or contests that include athletic elements, the court added. Unless the lease “makes it clear that a restriction is intended, the language is construed as merely descriptive of the use, and not as a limitation of that use,” said the court. Also, nothing else in the lease directly barred the public boxing matches.

• Oceana Holding Corp. v. Atlantic Oceana Inc.: No. 18031/06, 2006 N.Y. Misc. LEXIS 2140 (N.Y. Sup. Ct. 8/2/06).

CLLI Source

A. Barry Levine, Esq.: 320 E. 23rd St., New York, NY 10010; (212) 477-5118; blevine2@nyc.rr.com.