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In theory, a sublet seems easy: When you let a tenant sublet its space, the subtenant pays the tenant its rent due under the sublease, and the tenant pays you its rent or percentage rent due under the lease. While that’s the way sublet scenarios are designed and expected to work, you can’t count on the tenant carrying out its part of the bargain. After you’ve consented to a sublet, the tenant could decide not, or be unable, to pay you—even if it&...
Sometimes, when a tenant’s retail business is in trouble, instead of closing the tenant will try to find a buyer. If the owner had previously obtained an eviction order because the tenant had defaulted on its rent obligations, things can get complicated, especially in a situation where the tenant offers to pay the back rent, plus an additional amount in exchange for the owner allowing it to stay in the space until it has a buyer. Owners should be aware that such a...
Q: A tenant that wants to sublet its space has offered a replacement tenant, but the new tenant wouldn’t meet the requirements we had agreed on in the sublet and assignment provisions of our lease, so I have refused to consent to this arrangement. In fact, the new tenant wants to pay less base rent and is insisting that we sign a new lease. The deal is actually unfavorable to me, but now the tenant is claiming ...
It’s an undertaking for any tenant to scout out prospective commercial space, negotiate a lease, and then deal with the logistics and expense of moving into that space. So, after going through all of the effort to get established at a property, it’s not unusual for a big tenant that’s leasing an entire building to ask for a “right of first refusal”—that is, a right to buy the space if and when a third party offers to buy it. If the te...
When negotiating your leases, you may want to include a recapture right that you can exercise if the tenant intends to assign its lease or sublet all or part of its space. And you may want to include a profit-sharing clause that will require the tenant to pay all or part of any profit it makes from an assignment or a sublet if you decide not to recapture the space.
Q:The office building I own is located in an up-and-coming neighborhood that consists of retail, office building, and residential apartment properties. It’s a so-called “upscale” shopping and living area, and I’d like to keep the appearance of my building attractive. However, a prospective tenant needs to install rooftop equipment to make its business function in the space it would lease from...
If you own commercial property and are contemplating branching out and acquiring more properties, you might not know where to start. A good jumping off point is understanding what type of leasing opportunities are available—and their interplay with the commercial real estate market now. Although in many areas of the country, there’s been a steady uptick in real estate development and even a boom in affluent areas where mixed-use properties are more popular t...
If a tenant wants you to specify the number of its unit, store, or suite in the lease, then say in the lease that the tenant’s unit, store, or suite is “presently known as [insert Unit/Store/Suite number, e.g., 4B]." The phrase “presently known as” will give you the flexibility to change the number of the tenant’s unit, store, or suite during the lease term without having to get the tenant’s consent.
Many businesses need certain types of licenses or need to meet certain legal requirements in order to operate. If those end up not being attainable, it renders their space unusable in some cases. And that could mean that you’ll have to deal with a tenant that’s trying to get out of its lease.
Every lease gives an owner certain remedies, such as eviction or the collection of damages, that the owner can use if something the tenant does or fails to do fits the lease’s definition of an “event of default.” But what if your lease doesn’t clearly define what acts or omissions by the tenant are events of default? You could be powerless to do anything even though you think you should be allowed to use your remedies.
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