We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
Most shopping center and strip mall owners are always looking for ways to bring in more income. If you’re negotiating leases with some prospective tenants to fill vacant space and they’ll be paying percentage rent and base rent, there are often-overlooked ways to boost your rent revenues that you should try to put in the lease.
If you’ve ever experienced a situation where a tenant has vacated its space, you might have been tempted to make use of that portion of your property while you pursue claims against the tenant for breaching its lease. But that could be a big mistake. A tenant could allege, and a court could agree, that by using the space for your benefit you’ve lost your chance to pursue your claims against the tenant that would allow you to collect monetary damages. A recent New York case shows owners why they should proceed with caution in this scenario.
Tenants often seek financing to help them run their businesses, so you have probably gotten numerous requests from tenants for a “landlord’s lien waiver.” Without the lien waiver, a tenant’s lender may refuse to go through with the loan, or an equipment lessor may refuse to lease expensive equipment to the tenant. A lien waiver typically states that you agree to waive a valuable right—that is, the right to take possession of the tenant’s personal property if it doesn’t pay its rent.
Like many owners, you may have certain tenants that commit the same lease violation over and over. But they always cure—that is, correct—the violation before it becomes a lease default. For instance, they repeatedly pay their rent late each month.
If the office building you own has multiple common areas and some meeting spaces that are reserved specifically for certain tenants that are usually available for use, they are likely a selling point for some tenants. But if the building is undergoing work to update and refresh those spaces while you’re negotiating leases with several tenants, you might be concerned that if the work continues past the point where they expect to be able to start using these spaces, they’ll try to terminate their leases.
Commercial property owners know that having a visible and successful restaurant is not only lucrative, but also can be an amenity that improves the image of the property and provides an essential service to residents and other tenants or occupants of an office building, shopping center, or mixed-use project, not to mention the local community. However, a large number of all new restaurants close after only one year of operation. And this rate greatly increases after three years.
Assignments can work in both a commercial property owner’s and tenant’s favor in certain circumstances. But there also are times when an assignment could be harmful. For example, if you’ve found a tenant that’s perfect for your retail space, but because of the synergy you’ve created among tenants at the shopping center, it’s crucial that this tenant mustn’t assign its lease to any type of business that deviates from what it is selling. There is a way you can protect yourself in the lease.
Sometimes, in addition to the lease itself, a tenant and owner will sign a common area maintenance agreement. If that’s called for, be very careful about making sure that the terms in both documents match. Otherwise, any ambiguity could lead to a court battle. That was the case for a movie theater tenant and owner in Washington.
Don’t be surprised if a prospective tenant asks you to give it early access to its space before all aspects of your deal are finalized. Some tenants are confident that their financing will go through and that other issues will be resolved without incident. A common reason in retail leasing for tenants to ask for the right to get into the space early is to avoid delays in opening. While it makes sense, and you might want to accommodate a tenant that brings something positive to your bottom line, the shopping center, or both, it’s also not harmless.
Some commercial tenants require certain amenities and they won’t sign leases for space if they don’t get them. But you may be concerned about what would happen if you have to get rid of amenities. So how can you carve out a right to eliminate amenities in the future if it becomes necessary?
RSS