Leave Room to Change or Eliminate Amenities

Leave Room to Change or Eliminate Amenities

Some commercial tenants require certain amenities and they won’t sign leases for space if they don’t get them. But you may be concerned about what would happen if you have to get rid of amenities. So how can you carve out a right to eliminate amenities in the future if it becomes necessary?

Many leases say only that you can “limit” amenities, such as parking spaces, after the lease term begins. If you try to recoup them later, the tenant could argue that placing a limit on amenities doesn’t give you the right to eliminate them completely. A limit entitles you only to restrict something, not to get rid of it.

When drafting your lease, also consider whether you may at some point in the future need to deny your tenant certain amenities—such as the right to use a portion of its parking spaces—temporarily, rather than limiting or eliminating them. If you suggest including a lease provision that gives you the right to do this, be prepared for the tenant to push back. It could claim that you should compensate it for any lost business it suffers. The tenant’s fear that temporarily taking away its amenities, especially parking spots, will discourage its customers is rational, so you should include lease provisions that compensate it for reasonable losses.

Don’t leave room for debate if you want or need to take back amenities or parking spaces from a tenant for your own use. If you want the right to get rid of a tenant’s amenities entirely, say in the lease that you can “eliminate” them. For example, get the right to “eliminate and/or limit the number of the employee parking spaces to be provided” to the tenant.

It’s common for a knowledgeable tenant to negotiate a clause in its lease that protects it from a temporary loss of amenities. The tenant most likely will try to negotiate provisions that recognize that at some point, if you’ve denied the tenant the right to use a portion of the premises for a certain number of days during the course of a particular period—like a full calendar year—it should be compensated for the loss of business. A provision covering such a scenario should include a method for calculating that compensation. While you may want to give in to this reasonable request, make sure that the method is fair to you, not just the tenant. For model lease language with a method that you can adapt, see “Get Control Over Tenant’s Right to Amenities,” available to subscribers here