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Over the years, commercial real estate owners and tenants have hammered out many issues surrounding compliance with the Americans with Disabilities Act, often specifying in their leases which party will be responsible for compliance. But if you don’t draft your lease terms carefully with a tenant that plans to do construction at your building or center, you could face an issue that is still controversial: who is responsible for making sure that common areas
Unlike office building tenants, many retail tenants rely on foot traffic to bring in at least some of their sales. If you own a shopping center for long enough, you’ve probably had to do maintenance work or make repairs to your property, which may have included erecting scaffolding or setting up other equipment that blocked storefronts to some degree.
The popularity of mixed-used properties—buildings with both residential occupants and retail tenants—has increased in recent years, creating a unique opportunity for some owners who can reap the benefits of such an arrangement. For example, popular retail tenants are exposed to additional on-site customer foot traffic. And potential residents may enjoy easy access to shopping, services, or entertainment.
Trying to fill vacant space while your office building or shopping center is undergoing renovations can be tricky. A new tenant might anticipate not having access to some of the amenities, equipment, or services that it expects to be able to use.
In some cases, either you or the tenant—or both parties—will want to end the tenant’s lease early. This isn’t necessarily a bad thing. The tenant may be having a hard time making ends meet and want to downsize, relocate to cheaper space, or go out of business, giving you the opportunity to re-rent the space to a more lucrative tenant—especially if you plan on collecting percentage rent that you’ve been missing out on with the current ...
A letter of intent (LOI), also known as a “term sheet,” sets the stage for a lease. Signed by both the owner and tenant, the LOI indicates that both parties intend to go through with a lease, and includes terms that are fundamentally important to the tenant's operation, such as rent and tenant improvements. And the LOI can affect other parties, such as brokers, who can cause trouble if their services aren’t addressed accurately in the LOI.
At the beginning of negotiations, when you ask yourself the broad question of what rights you can put into the lease to protect yourself if your tenant defaults, “self-help” should come to mind as one of the remedies you can rely on. Most standard commercial leases include a “self-help” right—that is, the right to cure a tenant’s default and collect any attorney’s fees associated with the process—to protect the owner.
Most leases contain an assignment clause that requires tenants to get your consent before they may assign their leases. But some leases contain a loophole that risks giving the tenant too broad a right and being forced later to rent space to a tenant that isn’t appropriate for your shopping center--despite painstaking efforts to create optimal tenant synergy there. If your consent doesn’t include certain conditions, your efforts might be in vain.
If your lease’s assignment clause is like most, it requires the tenant to get your written consent before it may assign its lease. But unless that consent includes certain conditions, you risk giving the tenant too broad a right and being forced later to rent space to a tenant that isn’t appropriate for your office building, despite the fact that you’ve spent time vetting other tenants to create the right mix at the property. You can avoid this pitfall...
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