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An electronics store leases 3,000 square feet of shopping center space. But the city won’t let the store operate until wheelchair ramps are installed and the parking lot is re-striped to comply with the Americans with Disabilities Act (ADA). The owner refuses to do the work. So the tenant pays a contractor $30,000 to make the required modifications and sues the owner for its costs, claiming breach of the lease. Key lease terms:
A letter of credit (LC) offers distinct advantages over a cash security deposit. If the tenant defaults, drawing on the LC should be as easy and automatic as making a withdrawal from the tenant’s security deposit account. Unfortunately, it doesn’t always work out that way. The key is what the LC says.
Let’s say a dry cleaner wants to lease space in your strip mall. During negotiations, its attorney asks for a use clause permitting use of the premises for not only dry cleaning but also any other uses you find “reasonably acceptable.” It seems fairly unobjectionable, especially since you’re the arbiter of “reasonably acceptable.” So, you agree.
Depending on whether your property manager is a third party or works directly for you, it will probably check in differently. Because it’s providing financial information to you, a third-party property manager is obligated to report to you at least monthly regarding financial issues and any other predetermined topics. A property manager that works directly for you might have a tendency to check in more often. But both types of property managers should be instructed to check in with you more often about specific issues where time is of the essence.
There are two ways to evict a tenant: (1) “Actual eviction,” or going to court to get an eviction order, is the proper way; and (2) “constructive eviction,” or doing something so egregious to interfere with the tenant’s business that it forces the tenant to leave, is the other way—one you want to avoid at all costs. The term “constructive eviction” is misleading since the tenant actually decides to leave without being ordered to. But while the “eviction” is a legal fiction, the legal consequences are very real.
Filling a vacant space while your building is undergoing renovations can be tricky. Your lease needs to protect you from a new tenant who feels entitled to terminate his lease or sue you because portions of the space or common areas aren’t usable during construction. Our video gives you five quick tips for how to protect yourself: Five Tips for Limiting Construction Delay Claims.
Co-working companies have reportedly caused a disruption in the marketplace in terms of how owners reward brokers for securing licenses and short-term leases. WeWork has reportedly been incentivizing brokers in a more aggressive structure than is typical in the industry.
If you require a tenant to have a guarantor before signing a lease, consider whether you want the guaranty to apply to renewal or extension terms created by future amendments to the lease. If so, make sure your lease and amendments specify that the guaranty will be “continuing,” so that the guarantor remains on the hook.
When a tenant insists on having its space delivered by a "drop-dead date" it has the potential to expose you to a variety of draconian consequences if the date isn’t met. That's why negotiations over this request are extremely important. If you don't carve out rights for yourself, you could end up giving the tenant free rent, or worse, suffering significant monetary penalties, and even the ability for the tenant to terminate the lease agreement. Do the following when you're met with such a demand:
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