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Although the commercial real estate market is steadily improving, tenants still are negotiating aggressively for lease terms that they otherwise wouldn't have been able to get before the downturn. During that time, most national tenants—whether or not they were struggling—asked their owners for rent abatements. But some tenants with a lot of clout asked for either a profit-sharing or a percentage ownership agreement—rights that can be much more luc...

If you've signed a “governing document” with the owner of an adjoining shopping center or the tenant of a freestanding building at your center, you've agreed to be subject to certain restrictions. A governing document—which can be an operation and easement agreement (OEA), a reciprocal easement agreement (REA), or a declaration of covenants, conditions, and restrictions (CC&Rs)—dictates how issues like parking, signage, construction, ...

You signed a lease with a tenant who agreed to use its space for a specific purpose. When you find out that the tenant sublet the space, and that the subtenant is using it for a completely different purpose than you and the tenant had agreed upon, you realize that your lease's use clause wasn't as strong as you thought. Or you could discover that one of your tenants that hasn't sublet its space is using it improperly itself.

Commercial owners have much to learn from the case law issued by U.S. federal and state courts over the past year. The biggest challenge for owners seems to be drafting clear lease language, which can protect them from lawsuits filed by tenants arguing that they have rights the owner didn't intend to give them. If your lease provisions are ambiguous—failing to clearly define your and your tenant's rights and obligations—a court could interpret the le...

Renting to a tenant on a percentage rent basis can be rewarding if the tenant operates a profitable business—and accurately reports its gross sales. The higher the profit, the higher the amount you can collect from the tenant. But if the tenant underreports its sales, you'll get paid less than you are entitled to under the lease.

If one of your tenants has defaulted on its lease or damaged its space, you know the importance of having both a security deposit amount large enough to cover expensive problems and a clause in the lease that will protect you from having to spend your own money rectifying them. But be prepared for a tough negotiation—especially in this economy, when many tenants have a hard time coming up with the cash for a deposit and fear that they will lose it if they h...

All office building and shopping center leases should have the same basic provisions that address the rules and regulations for how the property will operate, such as rent collection, allocation of CAM costs, exclusives and co-tenancy rights, operating hours, and security measures. But owners should go above and beyond basic provisions.

In every commercial real estate lease a tenant has the right to quiet enjoyment of the space it rents. While all of your shopping center tenants are entitled to enjoy the use of their space, some may own businesses that generate noise, play loud music, or attract customer lines or crowds that could interfere with the rights of other tenants that thrive on providing a quiet atmosphere for their own customers. For example, a gym or a restaurant with outdoor seating in a r...

If you're struggling, you may be considering renegotiating your mortgage. Although mortgage renegotiation may temporarily help your cash flow problem, be aware that it may not be a permanent fix.

The risk involved—and the amount of leverage you have—in renegotiating will depend largely on the type of commercial property loan you have: recourse or nonrecourse. Before entering into a mortgage renegotiation, it is critical to understand your loan and ...

Evicting a struggling tenant is never easy. Handling an eviction poorly may create a contentious situation for you and your property manager, or even result in a lawsuit for wrongful eviction. In this economy, it is critical to take action as soon as a tenant sends a partial rent payment or misses a rent payment altogether. Nonpayment of rent is the most common breach of a tenant's lease, and a major signal that it is on the verge of a default. Protect yourself by f...