Get Right to Erect Scaffolding Without Tenant Retaliation
If you are a building owner, you may need to repair, clean, or renovate the facade of your building at some point, or you may be required to do so periodically under local laws or regulations. And you may need to erect scaffolding on the building so workers can do the repair or renovation work. But tenants—especially retail tenants—typically don't like scaffolding, because it can block their stores' visibility, thus harming their business.
Unfortunately, if your lease is like many we have seen, it has a loophole because it doesn't address your right to erect scaffolding. As a result, if your tenants' businesses decline because of the scaffolding, the tenants might look for ways to retaliate or to get out of their leases. For example, a tenant could argue that you constructively evicted it—that is, erecting the scaffolding that harmed its business was tantamount to an eviction—or demand concessions from you in return for the business losses.
To protect yourself, make sure your lease gives you a right to erect scaffolding without letting the tenant take action against you for doing so, says New York City attorney Jonathan Weiss, who recently discussed this topic at a leasing seminar for a large retail broker group. With Weiss's help, we will tell you what to put into a scaffolding clause so you are adequately protected. We will also give you a Model Lease Clause (see box, at right) that you can adapt and use in your leases.
What to Say in Lease
To plug this loophole, Weiss suggests that you state in your lease that if you erect scaffolding on the building because of any construction, maintenance, or repair work, you will agree only to:
Perform the construction, maintenance, or repair work within a commercially reasonable time, subject to a force majeure. Thus, although you can't drag your feet in making the repairs, you need not worry that repair delays caused by a casualty will give the tenants any rights if the scaffolding stays up;
Use “commercially reasonable” efforts to erect the scaffolding in a way that doesn't materially interfere with tenant's access to its space [Clause, Par. a]. Thus, you will not get into trouble for minor interferences caused by the scaffolding; and
Install on the scaffolding, at the tenant's expense, a professionally printed sign furnished by the tenant and reasonably acceptable to you [Clause, Par. b].
Also, make it clear that the scaffolding will not change any of the tenant's lease obligations or be tantamount to a constructive eviction of the tenant [Clause, Par. c].
Possible Tenant Changes
Expect a smart tenant to demand changes to the scaffolding clause that place limits on your scaffolding right and give the tenant a remedy if the scaffolding stays up for a long time, notes Weiss. Whether you give in to these changes depends on how much negotiating power the tenant has. For example, the tenant may demand that you agree to:
Erect the scaffolding in a way that doesn't unreasonably interfere with access to and visibility of the tenant's space;
Perform the inspection, construction, maintenance, or repair work diligently and as quickly as possible;
Get the tenant's prior consent if you want to advertise on the scaffolding;
Reimburse the tenant for its reasonable out-of-pocket costs and expenses for any temporary signage; and
Give the tenant a 50 percent rent abatement if the scaffolding stays in place for more than 180 days.
Jonathan Weiss, Esq.: Siller Wilk LLP, 675 Third Ave., New York, NY 10017; (212) 981-2312; firstname.lastname@example.org.