Dos & Don'ts

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Don’t ease up on your efforts to re-rent space that a tenant has vacated early—even if the tenant is doing its own search for somebody to take over its rent obligations. While spending your own time and money might seem like a needless reduplication of effort, sitting back and counting on the tenant to line up a replacement can prove even more costly.

Before notifying a tenant that it’s in default, be sure to check the lease to see if it includes any special requirements. If so, follow those requirements to the letter, or you could end up losing your eviction and other remedy rights.

Don’t send tenants a default notice for nonpayment of rent that doesn’t specifically identify the months. Failing to list the months of nonpayment in the notice may cost you your right to evict the tenant or terminate the lease.

Landlords should make it a point of emphasis to ensure that the lease describes all tenant payments and charges as either “rent” or “additional rent.” While it might seem like a legal technicality, using these terms ensures you access to fast-track eviction if the tenant later defaults on its obligation to pay operating expenses, taxes, trash removal, parking fees, and other leasing costs.

It's important to make your notice to a tenant valid if your attorney sends it. If a tenant violates your lease, you're probably required to notify the tenant in writing that if it doesn't cure—that is, correct—the violation by a set deadline, you can take action against it. But it's common for owners to ask their attorneys to send this violation notice on their behalf, because they think that will show the tenant that they're serious and make it more likely to comply, or because they're too busy to send it themselves.

One of the great unknowns of the COVID-19 coronavirus pandemic for landlords is the potential liability for infection, including class actions by clusters of employees, tenant employees, visitors, and other persons who claim they got the virus at your property. The key to defending yourself against such a claim would be to show you took reasonable steps to control COVID-19 infection risks at your property. But what reasonable steps must you take?

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.

Make sure your eviction notices (a.k.a. notices to quit) specify exactly which duty and section of the lease the tenant violated. Otherwise the notice may be too vague and you won’t be able to get a court to evict the tenant no matter what it allegedly did wrong.

If you’re the owner of a large retail property or several properties, you might decide to capitalize on the convenience factor and provide transportation for shoppers. While maximizing sales benefits you in the form of higher percentage rent and maintaining cotenancy obligations by ensuring that tenants stay in business, remember that it also is a plus to those businesses. Make sure that in the lease you include any costs related to the transportation services in the list of costs that you can pass through as operating expenses or CAM costs.

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 profitable, used merchandise at its space in your building or center.