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Consider this situation: With three years remaining on its lease, a commercial tenant decides to pull up stakes, vacate the premises, and stop paying rent. The landlord makes no effort to re-let the space and allows it to remain vacant through the end of the lease term. It then sues the tenant for the full three years’ worth of rent. There’s no clause in the lease requiring the landlord to “mitigate its damages” in the event of a tenant default. ...

“Constructive eviction” happens when a landlord commits a lease violation so egregious that it effectively forces the tenant out. Result: The tenant is free of all obligations and, in many cases, entitled to damages. And while constructive eviction cases used to be somewhat rare, recent rulings in favor of tenants have fueled a resurgence of new claims. Bottom Line: You need to be on guard against constructive eviction liability risks. Here&rsq...

By Sujata Yalamanchili, Esq. and Elizabeth A. Holden, Esq.

While retail and office building owners field defaults of many kinds from tenants that fail to follow their lease terms, nonpayment of rent is the most common breach of a tenant’s lease. It signals bigger problems for you than just your bottom line being affected in the months that you don’t collect rent from a tenant. A tenant that isn’t paying its rent is probably struggling to such a degree that it might go under, leaving you with the difficult job ...

Despite the abundance of online retailers offering great prices and free delivery to customers at the click of a button, shopping centers have slowly but surely made a comeback since the economic downturn nearly 10 years ago. But it’s not enough for center owners to coast on customers’ excitement over seeing items in person or enjoying a shopping experience that leads to sales. Center owners have to stick to marketing strategies more than ever, to grab custo...

Subleases can be more complicated than they seem. It’s not just a matter of allowing a tenant to give its space either temporarily or until the end of its lease to a replacement tenant. To protect themselves, owners should carefully draft sublease provisions.

Making a profit from tenants at your shopping center or mall depends on many factors—one of which is the key percentage rent arrangement. Percentage rent allows you to collect not only base rent, but also a percentage of the tenant’s gross sales done at the space it leases from you. But percentage rent doesn’t exist in a vacuum. It can be diminished by variables like the tenant’s success—not just with you, but wherever else it is doing busi...

If you own a shopping center or office building and have financial difficulties, you may be dealing with one, or even several, liens filed against the property. A savvy tenant knows that if it doesn’t have priority if you become bankrupt, it could be dramatically affected, up to and including having to move out of its space. That’s why it might demand that you agree to sign a “memorandum of lease” when you sign the lease with it. A memorandum of ...

Owners who lease space to large national retail tenants know that their demands can be hard to resist. Use of the space is the number one concern for these tenants. Often, they ask for flexibility in their use of the space that puts owners at a disadvantage. A lease that allows a tenant to use the space for a wide variety of uses—such as “for any lawful purpose” or “any lawful retail purpose”—can be troublesome.

Many tenants need to customize the space they lease, whether it’s in an office building or shopping center. But altering space—even for simple improvements—can be complicated. So when signing leases, you’ll want to have a work letter agreement—a contract that establishes the terms and conditions of structural changes that will be made to the tenant’s space prior to moving in.