The default section in a lease lists the set of conditions upon which a landlord may terminate a lease or tenant’s right to possession, as well as landlord’s remedy. 

The default remedies are significant and can severely impact a tenant.  This section should be reviewed to minimize the risk that landlord will be able to ever put tenant in default and seek a remedy.

Default Triggers are Stiff
The default provision typically will say that a default occurs in the event tenant fails to pay rent when due or with a few days of when due. 

Having a…
Continue Reading Leasing 101: Address Potential Exposure in the Default Section

 Not all retail tenants can get a landlord to agree to a co-tenancy provision, but this still should be part of the tenant’s discussion with its broker or landlord. 

A co-tenancy provision allows a tenant to pay a reduced amount of rent when certain conditions are not met either before the store opens or once the store is operating. 

Usually, the condition is that certain other stores, such as anchors, or a certain percentage of stores in the center have to be open for business. 

For example, if a certain anchor tenant plus 70% of the remaining space in the…
Continue Reading Leasing 101: The Co-Tenancy Clause

 I spoke at the Outdoor Retailer Summer and Winter Markets in Salt Lake City in 2010 and 2013 and know about the unique store operation concerns that outdoor retailers have. 

With the 2014 Outdoor Retailer Summer Market going on now in Salt Lake, this is a great time to briefly mention how these concerns can be handled in your company’s retail leases:

Retail vs. Storeroom Rent   Outdoor retailers may need significant storage for inventory.  While some retailers can place virtually all of their product on the showroom floor, outdoor retailers may need basements or other storage areas to house bikes,…
Continue Reading Outdoor Retailers: 10 Tips for Your Store Lease

 There almost always is a section at the end of a lease labeled ‘Miscellaneous’ into which shorter provisions that do not warrant their own section are dumped. 

Do not let the ‘Miscellaneous’ label or the random assortment of topics fool you.  These are important, and each one should be reviewed carefully. 

In no particular order, here is a brief discussion of four topics that usually appear in this section:

Attorney’s Fees
A lease should contain a ‘prevailing party’ provision regarding attorney’s fees.  In the event of a dispute between landlord and tenant that results in litigation or other action, this…
Continue Reading Leasing 101: The Miscellaneous (but still important) Provisions

 In my nineteen years of experience handling about 700 leases, there has only been one instance in which the holdover provision was triggered. 

It remains, however, an important provision to protect a tenant at the end of the lease term. 

A holdover provision provides landlord a remedy in the event the tenant remains in the leased premises, or ‘holds over,’ after the end of the lease term.  The holdover provision will provide landlord remedies in the event the tenant does not timely vacate by the end of the term. 

Holdover Remedy
Landlords typically will require tenants to pay 200% of…
Continue Reading Leasing 101: The Truth about Holding Over

 
 
The default section in a lease lists the set of conditions upon which a landlord may terminate a lease or tenant’s right to possession, as well as landlord’s remedy. 

The default remedies are significant and can severely impact a tenant.  This section should be reviewed to minimize the risk that landlord will be able to ever put tenant in default and seek a remedy.

Default Triggers are Stiff
The default provision typically will say that a default occurs in the event tenant fails to pay rent when due or with a few days of when due. 

Having a…
Continue Reading Leasing 101: Address Potential Exposure in the Default Section

A security deposit is the landlord’s attempt to mitigate the risk of a tenant that cannot, or will not, honor its lease obligations.  A landlord will review a prospective tenant’s financial statements, operating history, and reputation to determine this risk. 

Tenant’s Business History Will Drive the Deposit Amount
If the prospective tenant’s business is relatively new or its financial statements are not robust, this may drive a higher security deposit.  If the tenant has had financial or operational troubles in the past, a landlord may want to hedge its risk by requiring a larger security deposit.  A tenant with…
Continue Reading Leasing 101: Security Deposits

 Not all retail tenants can get a landlord to agree to a co-tenancy provision, but this still should be part of the tenant’s discussion with its broker or landlord. 

A co-tenancy provision allows a tenant to pay a reduced amount of rent when certain conditions are not met either before the store opens or once the store is operating. 

Usually, the condition is that certain other stores, such as anchors, or a certain percentage of stores in the center have to be open for business. 

For example, if a certain anchor tenant plus 70% of the remaining space in the…
Continue Reading Leasing 101: The Co-Tenancy Clause

 The indemnification, release, casualty, condemnation sections are highly technical and are somewhat dependent on the law of the state which contains the leased premises.

Indemnification

The exact language for the indemnification will depend on the individual state law. 

The lease ideally should contain mutual indemnifications between landlord and tenant that exclude the negligence and willful misconduct of the other party. 

The landlord may want tenant to indemnify the landlord even in cases in which the landlord is negligent.  The basis for landlord’s position regarding this usually is that the tenant’s insurance should still apply even in cases of the landlord’s…
Continue Reading Leasing 101: Indemnification & Releases