Don't Hurt Yourself When Agreeing to Protect Tenant's Visibility
For a retail tenant, visibility of its show windows and storefront signage is always a concern. So a savvy tenant often will demand that you agree in the lease not to block this visibility. But if the visibility restriction isn't drafted properly, it could cause many problems for you. For example, it might prevent you from doing simple maintenance work, renovations, or landscaping, or from staging promotional events that could benefit your center. Or you might violate the lease if something beyond your control—such as a government regulation—forces you, for example, to place a structure near a tenant's storefront, blocking its visibility.
To help you avoid such problems if you must agree to a visibility restriction, here's a checklist with five protections to include in your lease. We put together the checklist with the help of Jennifer R. Weily and Camilla Titterington of Developers Diversified Realty. There's a Model Lease Clause on p. 7 that you can adapt and use, which includes these protections.
Add Five Protections to Lease
Here are five protections that your lease should include if it will give visibility protection to the tenant's storefront sign and show windows:
Require Tenant to Continuously Operate
Make the visibility restriction contingent on the tenant's being continuously open and operating, says Weily [Clause, par. a]. If a tenant isn't open and operating, it doesn't need unimpeded visibility, she says.
Limit Your Obligations
Don't just agree not to block a tenant's visibility. Instead, set a limited restriction. Weily and Titterington recommend saying that you won't “materially” impair the visibility of the tenant's storefront sign or show windows by constructing new buildings, barriers, or other structures, or by landscaping within a certain “visibility area.” This way, structures and landscaping that don't significantly obstruct the tenant's visibility won't cause a lease violation, explains Titterington.
Define “visibility area” as the area included in the view of the tenant's storefront sign or show windows from a particular location—such as from the street, parking area, or other area immediately in front of the sign or windows, explains Weily. As further clarification, consider delineating the visibility area in writing, in an exhibit attached to the lease, she advises [Clause, par. a].
List When Visibility Restriction Won't Apply
List the circumstances in which the visibility restriction won't apply to you, says Weily. For example, it shouldn't apply if:
You must plant landscaping or erect barriers, buildings, or other structures within the visibility area to comply with governmental codes or regulations;
You replace any existing barriers, structures, or other improvements that were damaged or destroyed;
You relocate structures, signs (including pylon signs), or driveways because of “eminent domain” (that is, because the government has taken ownership of the property containing the existing structures, signs, or driveways); and
You hold or allow an activity in the visibility area for a limited amount of time—no more than, say, five calendar days, says Titterington [Clause, par. b]. For instance, you might want to erect scaffolding to maintain, repair, renovate, or expand the building in which the tenant's space is located, says Weily. Or you may want to allow a carnival to put up tents or displays in the visibility area to draw people to your center, says Titterington.
Practical Pointer: Expect savvy tenants to demand that temporary activities be limited to certain months in the year. These tenants will want to specifically exclude their busiest season, says Titterington.
Get Enough Time to Fix Visibility Restriction Violation
Demand adequate time to cure—that is, fix—any violation of the visibility restrictions, says Weily. She suggests that you have at least 30 days to cure the problem after getting the tenant's written notice. You also should get extra time if you've started to cure the violation but can't complete it by the deadline, adds Weily. And make clear that the deadline is extended if you're delayed because of events beyond your control (in legal terms, force majeure), says Titterington [Clause, par. c(i)].
Limit Tenant's Remedies
Limit the tenant's remedies if you fail to cure a visibility restriction violation by the deadline, advises Titterington. For example, as the sole remedy, give the tenant a right to a rent abatement starting on the day after the deadline expires and continuing until the visibility area is no longer materially impaired, she says [Clause, par. c(ii)]. This eliminates the tenant's right to sue you for damages or take some other action against you in this situation, she explains.
Camilla Titterington, Esq.: Legal Counsel, Developers Diversified Realty, 3300 Enterprise Pkwy., Cleveland, OH 44122-7249; (216) 755-5665; email@example.com.
Jennifer R. Weily, Esq.: Legal Counsel, Developers Diversified Realty, 3300 Enterprise Pkwy., Cleveland, OH 44122-7249; (216) 755-5647; firstname.lastname@example.org.