Let There Be No More Blog Postings Similar In Concept To Ruminations; We Have An Exclusive

Print

Many businesspeople reach agreement as to a principle expecting that someone else will express it in words that can be understood, in a common way, by others. So, when it is agreed that a landlord will not allow any “diner similar in concept to the tenant’s diner,” what were the landlord and tenant agreeing-upon? We would think that the tenant didn’t want competition in the form of having another restaurant that drew on the same kind of customer base. Of course, every restaurant competes with every other one, but the marketplace distinguishes between Michelin 3-star establishments and burger joints. That’s a key point whenever an exclusive use restriction is on the bargaining table.

So, was the tenant thinking that some diners would be acceptable and others would not be acceptable? If so, how does one slice and dice the category: diners? [Read more…]

Print

We All Scream For Ice Cream – But Don’t Do That As Your Exclusive Use Protection

Print

We were planning a family Thanksgiving turkey-centric dinner and ice cream as a dessert came to mind. Now, in our world, turkey and real ice cream don’t play together well, so the gears cranked on. What was the appeal of ice cream? Well, to figure that out, we flew to 30,000 feet for an overview. At that altitude, you can’t tell ice cream from any other frozen dessert. And, when we in the “doing leases” business think of frozen desserts, we think of a 1988 court decision. [Well, not really, but a good story is always a good way to start a Ruminations blog posting.] The case we thought about is: Draper and Kramer, Inc. v. Baskin Robbins, Inc. out of the U.S. District Court for the Northern District of Illinois. The decision can be seen by clicking HERE. [Read more…]

Print

Just What Is It You Want To Restrict? A Business? An Activity?

Print

Last week Ruminations wrote about the legal niceties involved when a lease says: “Landlord will not lease for the sale of widgets” as contrasted with saying “Widgets can’t be sold at the property.” Today, again writing about use restrictions, we’ll be less “legal,” but not entirely so.

Basically, there is a difference between banning a particular kind of business and banning a particular activity. In simple terms, by way of example, there is a difference between saying that no one can operate an office supply store and saying that no one can sell office supplies (or staplers). We’ll illustrate the issues involved by reference to a May 22, 2015 Florida District Court of Appeal’s decision. It isn’t the best example because of the political and social baggage the case carries, but that may also be why it is a good example. The political and social aspects are not up for discussion in this forum. That’s enough mystery: the case is Planned Parenthood of Greater Florida v. MMB Properties and the decision can be seen by clicking HERE. [Read more…]

Print

Exclusive Use Clauses – Writing Them Wrong

Print

An “evergreen” (or timeless) discussion topic at law conferences, such as the recently concluded ICSC Law Conference in Phoenix (a highly, highly recommended annual event) is the “exclusive use clause.” We’ve written about exclusive use restrictions, too many, many times, too many to furnish only a link or two. [If you want to see one or more of those postings, use “exclusive use” in the search box.] Today, we’ll talk a “little” law and we’ll throw in a bonus at the end.

Basically, Ruminations will look at the difference between writing “Landlord will not …” and “No part of the Property may be used … .” [Read more…]

Print

Horace Walpole Didn’t Have Landlords On His Mind

Print

Last week, Ruminations advocated that a lease giving the tenant a right to extend the term should include a provision wherein the landlord can/must send a “reminder” to the tenant that the extension option date was about to occur or had already occurred. [For those who haven’t yet looked at last week’s blog posting discussing some aspects of a lease extension option, it can be seen by clicking: HERE.] We also tacked on a specimen lease provision doing just that.

[Oh, Yes – we’ll explain Horace Walpole at the end of today’s posting.]

It would be fair to ask about the key features of a “reminder” provision. One very key aspect is that a landlord should be able to have the lease end at the agreed-upon time if its tenant doesn’t elect to exercise it extension option. So, a landlord should be able to send the reminder notice 30 or 60 days before last day the tenant should be sending its exercise notice. Another key aspect is that if the lease doesn’t end because neither party realized (or cared) that the date for exercise of the extension option had come and gone, the landlord should get the same period of time to find a replacement tenant as would have been the case if there were no requirement for a “reminder” notice from the landlord. To say that differently, if there was a 9 month notice requirement to extend the term, then the tenant would have to stay for 9 months after it gets the landlord’s “reminder.” If no “reminder is sent and the tenant didn’t timely notify its landlord that it was not going to exercise its extension option, it would be bound by the lease until 9 months after it then notifies the landlord that it wasn’t going to exercise the lease option. That way, a landlord would be allowing the lease term to continue running even though its tenant did not timely send an extension notice, but the landlord can cut the lease term off after 9 months just by sending a reminder notice to its tenant. [Read more…]

Print

Don’t Fight For the Right To Terminate (And A Stray Thought About Friends)

Print

This will be the 237th Ruminations blog posting and the first time we’ve done a potpourri. As readers can imagine, at any one time, there are dozens of thoughts running through the Ruminator’s mind, some useful, most not. Among those that are worth expressing, there are some that wouldn’t qualify under the Ruminations stylebook because they wouldn’t result in the killing of the requisite minimum number of trees (electrons?). So, today, we’ll toss out one such substantive thought and add one adjective thought just to fill the space. We’d say, “All the news that fits, we print,” but we don’t want to be chased by The Grey Lady. [Read more…]

Print

Whose Rogue Is It Anyway, A Landlord’s Or Its Tenant’s?

Print

Last week and the week before, we wrote about some substantive aspects of exclusive use covenants – promises by a landlord to its tenant that only that tenant will be permitted to sell certain goods or services at the shopping center. Our goal was to point out some of the difficulties and challenges faced when writing rules as to what can and can’t be sold and the extent to which certain other tenants could be free, in some or all regards, of those crafted restrictions.

We received some direct comments and a number were posted to various other web sites, notably on those hosted by Linked In. We also received some private comments. Most focused on the remedies an aggrieved tenant might have against its landlord if the landlord’s covenant (promise) was broken. None (yet) addressed how, when, and with what success a “protected” tenant might directly act against a neighboring tenant alleged to sell those goods or services even though the neighboring tenant knows or should know of the restriction. We promise to discuss this within the next few months, but not now. We’re waiting for a friend’s law review article to be published so that we can point interested readers to a “real” legal analysis, not just this Ruminator’s ramblings. [Read more…]

Print

Crafting Exclusive Use Provisions Is No Simple Task Unless You Want To Ignore The “Why” Behind Them

Print

On their faces, this week’s blog posting (and last week’s as well) are about exclusive use rights. Actually, they are about setting ourselves free of the handy formulations we all lean on when negotiating leases. Handy as the “same old, tried and true” lease clauses may be, sometimes we should step back and spend some serious thinking time about the subject matter in front of us. The topic of exclusive use rights is a perfect one to remind us of that approach. One has to think of the actual goods or services to be protected. One has to understand the “principle” behind every single “stock, standby, old friend” lease clause. As to those that grant a tenant an exclusive use right, Ruminations suggests that what a tenant is “entitled” to have protected is the good will that very tenant creates at a particular location. On the flip side, Ruminations doesn’t think that a tenant is entitled to protection against competition in general. [Read more…]

Print