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Percentage rent tenants are typically required to give landlords the monthly sales reports they use to calculate their percentage rent. All too often, though, the tenant provides only its gross sales figure—the amount on which percentage rent is calculated under the lease agreement. It omits sales from transactions that you’ve agreed to exclude from gross sales, such as discounts to sales provided to its employees. And that can cause problems. For one thing,...

One of the few positives to emerge from the pandemic for commercial leasing was how it got landlords and tenants to set aside historical mistrust and work together for their mutual welfare and survival. While the pressing issue at the height of the COVID-19 crisis was restructuring rent obligations, there are lots of other leasing issues where this approach could do both sides a world of good. Among these are lease provisions addressing insurance and responsibility for ...

Working from home and other post-COVID business realities have made many office tenants reluctant to sign a long-term lease. One way to overcome this is by offering tenants the option to terminate the lease early if the rent becomes unaffordable or the space becomes unnecessary. But while offering early termination options can give you a significant competitive edge, it can also cost you a boatload of money. That makes it essential to ensure that you get fair compensati...

It costs a lot of money to maintain a heating, ventilating, and air conditioning (HVAC) system. There’s also a lot at stake. Keeping the HVAC system humming is crucial to maintaining comfort, ensuring air quality, and, in some cases, preserving tenants’ stored inventory. Accordingly, HVAC inefficiencies and breakdowns are a frequent source of landlord-tenant disputes, including potential constructive eviction claims. That’s why it’s essential for...

Pet rules in a commercial lease? At first, I thought this was a terrible idea for an article. After all, the vast majority of commercial landlords in the U.S. don’t permit pets on the property—to the extent they even consider the issue at all. And it was for that very reason that I came to recognize why pets and commercial leasing is such a compelling idea, particularly in these times. Allowing pets might be just the unique amenity you need to compe...

With a recession looming, commercial landlords and tenants may once again need to exhibit the flexibility they displayed to get through the COVID-19 pandemic. While helping tenants meet their rent obligations will be the first-choice approach, landlords also need to be prepared in case tenants default. Rather than automatically seeking eviction, landlords may need to consider the possibility of letting the tenant remain in the space and gradually pay off what it owes, e...

Offering ROFOs is a great way to attract flourishing businesses. But it comes at a price.

Moving to a different building can be costly and disruptive. Accordingly, tenants that are growing rapidly may seek rights to expand within the building in case they run out of space. One way to accommodate this need is to grant what’s called a Right of First Offer (ROFO) giving the tenant dibs on space that becomes available in the building.

As retail and restaurant businesses contract and struggle to survive, many shopping center tenants are looking for ways to get out of their leases. One common exit strategy is for tenants to assign their lease interest or sublease some or all of the leased space to a third party. Tenants are generally allowed to do this, as long as the landlord gives consent to the arrangement.

Here’s a four-phase strategy for drafting a lease amendment letting a tenant contract its space.

In a post-pandemic world where a greater volume of work and business will be carried out remotely, many tenants will need the flexibility to not only expand but also contract their space. Accordingly, knowing how to negotiate and draft favorable contraction lease amendments can give your business a major advantage. And that’s what this analys...

The COVID-19 pandemic has illustrated the need for landlords and tenants to be flexible and work together to find solutions to leases that have become disadvantageous. One approach is to enter into a buy-out agreement allowing the tenant to end the lease early in exchange for an agreed-to sum of money. Maybe there’s already a clause in your current lease that provides for a buy-out, or maybe you’ll have to negotiate a new agreement with the tenant. Either wa...