Plugging Loopholes

Set Cap on Tenant's Refurbishment Allowance

November 24, 2010    

Some of your office building tenants that are only halfway through their lease terms may already be complaining that their space is looking shabby and the rent they'll be paying during the last few years of their leases will be higher than the outdated space will be worth at that point. For...

Place Limits on When Tenant Abatement Period Will End

October 31, 2010    

Although most leases give tenants the right to a rent abatement when their office or retail space becomes unusable after a fire, flood, or similar casualty, they fail to adequately define when the abatement period will end. Merely saying that the abatement period will continue until the space is...

End Retail Tenant's Special Rights and Remedies Upon Renewal

August 31, 2010    

Your lease with a retail tenant probably gives it certain special rights and remedies. For instance, the lease may include a cotenancy clause that lets the tenant abate its rent if you don't replace another tenant—typically, an anchor—when it goes dark. Or it may include an...

Pass Through Off-Site Traffic Improvement Costs to Tenants

July 25, 2010    

Most shopping center owners provide off-site traffic improvements—such as special signage and lighting in areas leading to the center—to their tenants. These improvements benefit both owners and tenants because they help increase customer traffic, which means more sales at the center...

Prevent Damage to Center from Tenant's Trade Name

February 26, 2010    

If the lease with your strip mall or shopping center tenant doesn't include provisions allowing you to control its right to choose and change its trade name, you are giving it the power to cause serious problems. At the very least, a tenant's illegal or unsuitable use of a trade name may...

Protect Universal Space: Draft Lease Provisions with Degrees of Control

August 30, 2009    

In today's market, more tenants are leaving their leases early if their businesses are in trouble. Consequently, owners that are left in the lurch with broken lease agreements and a sudden loss of rental income must be prepared to quickly turn over tenants to fill vacant space. Creating...

Use Disincentives to Discourage Month-to-Month Tenancy

July 26, 2009    

When a commercial tenant stays in its space after its lease term expires, it becomes a “holdover” tenant. The most common reason for a holdover is the tenant's inability to move because its new space isn't ready yet. As a result of a tenant's mismanaging its relocation, a...

How to Avoid Liability if Power Goes Out

April 30, 2009    

With the summer approaching fast, power outages can be a daily occurrence. If the power in your area is shut off, tenants with an axe to grind might try to sue you for any resulting damage to its equipment and business. Or the tenant could argue that it has been “constructively evicted...

Bankruptcy-Proofing Tenant's Security Deposit

April 28, 2009    

By Benjamin F. Kursman, Esq.

Given the precarious credit situation of many tenants today, it is more important than ever that a tenant's security deposit be as secure as possible and immunized from the consequences of a tenant bankruptcy. There are several techniques owners can...

Limit Franchisor's Ability to Freely Assign and Sublet

March 25, 2009    

Franchisor tenants in today's market are demanding that their leases give them ample freedom to sublet or assign to any franchisee they choose without your prior consent. Franchisors make this demand because they don't want you putting any limitations on which franchisees they can do...

How to Protect Against Bounced Rent Checks

March 25, 2009    

Bounced rent checks are a major hassle. Your bank will charge you a fee for a bounced check, and then you will have to spend more time actually collecting the rent from the tenant. Also, by the time you redeposit the bounced check or get a new one from the tenant, the rent is way overdue.

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Avoid Losing Letter of Credit to FDIC

February 26, 2009    

Time was, commercial property owners weren't terribly concerned about which bank issued the letter of credit securing its tenant's obligations under a lease. Banks were assumed to be solvent and well capitalized.