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The bad news is that you may not be able to completely contract out of your duty to mitigate damages; the good news is that you can limit it. But to do so, you need to add specific language to your lease. Here’s how to draft and negotiate a fair, reasonable, and legally enforceable mitigation of damages limitations clause, along with a Model Lease Clause that you can adapt for your own use.
For anchors and retail tenants with bargaining clout, the name of the game is drawing as many shoppers to the shopping center as possible. So, they’re apt to insist that the landlord refrain from renting to offices, educational facilities, and other non-retail tenants.
When negotiating a percentage rent lease, don’t be surprised if a retail tenant demands that you exclude bad debts from the formula for calculating gross sales. This is hardly an unreasonable demand. After all, why should the tenant have to pay percentage rent on customer receivables that it can’t collect? But if you’re not careful, giving in to this demand can cost you more than you bargain for.
Getting tenants to leave their space when the lease ends can be a difficult and costly proposition. For one thing, you may have to initiate an eviction suit to get the tenant out. And if you’ve already re-rented the space, holdovers expose you to the risk of being sued by the new tenant for failing to deliver the space on time. All of this makes the holdover rent rate a crucial issue in typical lease negotiations. If a tenant is in a strong bargaining position, yo...
Any time a property is sold there’s the possibility that the sale will trigger a tax assessment. And that creates the risk of a major real estate tax increase. Who pays for that increase when and if it occurs? Obviously, tenants won’t want to. They try to exclude tax increases resulting from a building sale from the taxes they must pay. While landlords often go along on this point, they may pay a hefty price to the extent it cuts the property’s price v...
It’s become abundantly clear that to overcome the economic dislocation caused by COVID-19, landlords must be able to work not only with their tenants but also their lenders. For one thing, you probably can’t offer tenants rent concessions and other relief without your lenders’ consent. You may also need your lenders to cut you some slack on loan repayments while you wrestle with cashflow challenges.
The COVID-19 crisis has forced landlords and tenants around the country to rework their leases. And while the process will continue for months and even years, we’ve reached the point where we can step back and consider the big-picture leasing lessons from the tumultuous months of March, April, and May. Because we know you still have tons of work to do, we’ll keep it brief by boiling down what leasing experts and attorneys steeped in the process say they&rsqu...
The months of April and May were a nightmare for rent collections. Things may not improve dramatically in June, July, or August. And with evictions temporarily barred in so many jurisdictions, landlords may feel they have no choice but to put up with tenant defaults and negotiate the best possible settlement arrangement.
But hardball may still be an option, at least with tenants that have guarantors. Here’s a strategy you can use to leverage the guarantors&r...
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