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SITUATION: A tenant leases property to operate a car wash. The lease requires the tenant to keep the property in good repair. The actual language:

The Tenant shall keep the Demised premises in good condition and repair . . . the tenant, at its sole cost and expense, will take good care of the Demised Premises . . . and will keep the same in good order and condition and make all necessary repairs thereto, interior and exte...

An increasing number of retailers sell both new and “vintage” or consigned merchandise. But if you want a retail tenant’s space to be used solely or primarily for sales of new merchandise, then you’ll need to say this in the lease’s use clause. And be aware that using a term other than “new”—such as “retail”—may backfire, letting the tenant move its new merchandise to another location and keep less profit...

Leasing to a non-U.S. business raises special legal considerations. For example, you may be unable to enforce lease payment obligations and court judgments against tenants who keep their assets outside the U.S.

So, before signing a lease with a foreign tenant, confirm that the tenant keeps adequate assets in the U.S. and add lease language expressly requiring the tenant to maintain U.S. assets at no less than that level during the lease term.

Giving tenants construction allowances to make improvements to the property exposes you to legal risks. If the tenant doesn’t pay its contractors, they may try to collect the debt from you, which can include placing a mechanic’s lien on the property. Requiring the tenant to get “lien waivers”—that is, contractual agreements by a contractor to waive its lien rights with regard to the contract work—from its contractors is one way to pro...

If your lease requires tenants to pay you their share of the property/facility’s electric bill, don’t say they have to pay for the electricity they “consume.” That’s because the bills you receive from the electric company may include elements not related to consumption, such as demand charges. So, using the word “consume” may preclude you from passing along these non-consumption charges to your tenants.

After a Kentucky shopping center tenant stopped paying rent and abandoned the premises, the landlord retook possession and billed the tenant for the roughly $3.211 million in unpaid rent remaining through the end of the lease. The tenant admitted to being in default but contested the landlord’s right to accelerate the rent because the lease didn’t say anything about acceleration. The court agreed, citing cases in the state ruling against accelerated rent cla...

Many shopping center leases include “radius clauses” banning tenants from opening similar businesses within a certain radius of the leased location. The idea is to prevent tenants from establishing essentially identical establishments to siphon off revenues and thereby minimize gross sales subject to percentage rent under the lease. Although protecting gross rent revenues is a legitimate business interest, radius clauses are frowned on because they stifle ne...

Q: Two tenants at the shopping center I own are currently in a dispute about who has the right to sell a certain product. A toy store tenant signed a lease with an exclusive use clause that gives it the right to be the only tenant in the center that sells toys. A variety store signed a lease that allows it to sell various items for entertainment. It was made aware at the time of the lease signing that the toy store h...

If you own an unusual building—one with “character,” a unique layout, or historic elements—you’ll need to find tenants that appreciate quirks. These types of properties can be wildly successful, but you’ll need to take into account marketing and leasing issues that may not be a factor when leasing traditional commercial properties.

Offering tenant improvement allowances (TIAs) is a great way to attract and retain small and new businesses that can’t afford the renovations they need to open shop. But it can also backfire if the tenant defaults before moving in or generating the revenues necessary to pay you back. TIAs also expose you to financial and liability risks. Negotiating the right TIA lease clause is crucial to avoid getting burned.