Don't Give New Tenant Broad Use if Existing Tenant Has Exclusive

April 30, 2008

If an existing tenant has an exclusive use right, don't agree to a broad use clause in a new tenant's lease (unless the existing tenant's exclusive specifically makes an exception for the new tenant's use), warns Denver attorney Neil B. Oberfeld. Otherwise, the new tenant could easily change its use to one that violates the existing tenant's exclusive, he explains. And then you'd be in hot water with the existing tenant.

If an existing tenant has an exclusive use right, don't agree to a broad use clause in a new tenant's lease (unless the existing tenant's exclusive specifically makes an exception for the new tenant's use), warns Denver attorney Neil B. Oberfeld. Otherwise, the new tenant could easily change its use to one that violates the existing tenant's exclusive, he explains. And then you'd be in hot water with the existing tenant.

If the new tenant won't sign a lease without a broad use clause, require it to agree not to use its space in any way that violates the prohibited uses set out in its lease, the center's governing documents, and any of your other tenants’ existing and future exclusives, says Oberfeld. Alternatively, you or the new tenant could try negotiating a side agreement with the existing tenant consenting to the new tenant's use, he notes.

Insider Sources

Neil B. Oberfeld, Esq.: Shareholder, Isaacson Rosenbaum, P.C.; 633 17th St., Ste. 2200, Denver, CO 80202; (303) 256-3992; noberfield@ir-law.com

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