Plugging Loopholes

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Percentage rent leases commonly permit tenants to deduct or exclude certain kinds of transactions that don’t generate a profit for the tenant from the gross sales on which percentage rent is due. Typical examples include revenues from gift wrapping, deliveries, repairs to items purchased from the tenant, and discount sales to employees. The problem is that these services and sales may, in fact, generate significant revenue and profits.

Percentage rent leases commonly permit tenants to deduct or exclude certain kinds of transactions that don’t generate a profit for the tenant from the gross sales on which percentage rent is due. Typical examples include revenues from gift wrapping, deliveries, repairs to items purchased from the tenant, and discount sales to employees. The problem is that these services and sales may, in fact, generate significant revenue and profits.

New local laws may make landlords pay for tenants’ illegal business.

Federal and state laws make property owners liable for environmental damage done by a tenant. That makes it imperative to verify that tenants comply with those laws. But a tenant may refuse to grant you access to inspect or perform environmental testing for that purpose. And without clear lease language ensuring such access, you could be literally and figuratively locked out in your quest for verification of environmental compliance, leaving you exposed to millions of d...

Federal and state laws make property owners liable for environmental damage done by a tenant. That makes it imperative to verify that tenants comply with those laws. But a tenant may refuse to grant you access to inspect or perform environmental testing for that purpose. And without clear lease language ensuring such access, you could be literally and figuratively locked out in your quest for verification of environmental compliance, leaving you exposed to millions of d...