If exclusive use rights are so important to some tenants and if landlords almost always resist granting such rights, why is it that, when agreement (compromise) is reached, the parties keep making the same mistakes? We’ve written before about the generality of “exclusives” and also about some specific approaches. For the benefit of new readers and to remind others, Ruminations holds that the presence or absence of an exclusive use right (and the scope of that right) is purely a function of bargaining power. Basically, how much does each party want the lease? That having been said, here are more of our thoughts.
To the extent that an exclusive use right is justifiable, tenants should be entitled to protection for their primary business, not for items of tertiary importance. A pizzeria sells pizza. If a pizzeria couldn’t sell pizza, then it isn’t one. Selling pizza is its “primary” use. So, to the extent that the presence of a second pizzeria at a particular property would seriously cannibalize sales at the first one, it is entirely appropriate for a landlord to be barred from allowing that second one. But, a tenant that holds itself out to be a pizzeria shouldn’t be entitled to keep others (such as a health food store) from selling frozen pizzas or to keep others from selling “Italian-style” sandwiches. If a pizzeria can’t co-exist with a sandwich shop, then it is a sandwich shop, not a pizzeria. Of course, defining a tenant’s primary business may not be as easy as looking at the tenant’s name, but we all get the idea (provided we are willing to step out of our uniforms – landlord or tenant – and look at the entire picture). [Read more…]
Print
We are no fan of a particular type of “surrender” clause commonly found in leases, the “style” that calls for a tenant to “leave the property in as good condition as when it moved in, save normal wear and tear.” These clauses come in a variety of flavors, none of which Ruminations will offer today. In 2014, we shared some thoughts on this same topic in a posting that can be seen by clicking: 
Last week, we wrote about the need for competence when it comes to crafting deal documents such as a lease. Among the over 400 Ruminations prior blog postings are more than a dozen dealing with insurance. This week, we get to combine the two subjects thanks to a December 5, 2018 unpublished ruling from a New Jersey appeals court resolving an insurance dispute. The facts are mundane, but provide a roadmap for us today.
Some concepts are so simple that we never think that we’d have to point them out. But, today, one of those concepts occurred to us, and we’d like to share it with our readers. Here it is:
New York State has a law, New York General Business Law Section 518. It deals with how a merchant may post a pricing sign when there are two prices for the same goods – one if paying with cash, and one when paying with a credit (debit) card. This law raised a First Amendment issue, one that worked its way up to the United States Supreme Court and back to New York State courts. So, why will it be discussed on a real property blog site? It is because Ruminations is fascinated, some might say obsessed, with how a literal reading of text doesn’t always turn out to be its applicable meaning. So, it doesn’t matter whether the issue comes up in a contract or a law. Courts don’t have two sets of rules. Yes, some rules may not apply when looking at one category or the other, such as the use of “legislative history” when looking at a law. But, the analogous rule for interpreting words in an agreement is the parties’ “course of conduct” or “negotiation history.” In every case, the goal is the same: find the intent behind the text. 
Let’s get out in the world. Let’s leave our silos. Let’s break through the real estate bubble. What is Ruminations babbling about? Real property law is not an island unto itself. It is part of the entire body of law. Yet, even those few of us who search for “real” law don’t often look at what courts say in other areas. There are things that can be learned by leaving the real estate tent to see how the rest of the (law) world lives. Today’s blog posting could show why we need to take such strolls. It describes a court decision about how to interpret a seemingly unambiguous trust document. There’s a story behind it and here it is.
We’ve written about arbitration a few times and made reference to this alternate dispute resolution process in several blog postings over the years. [For example, click: 
Who hasn’t heard this or something like this? “Can we just make it simple and do a lease amendment instead of a whole new lease? We don’t need a new lease and it will save us money.” Often, that’s a hint that there’s going to be a big bill. And, worse, later on, when a question comes up, there will be another bill.
Recent Comments