Whose Calamity (Risk) Is It?

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The COVID-19 Coronavirus is responsible for millions of words that would never have been written in its absence, even ours today. We have no special understanding of this virus or its impact. So, don’t expect us to add to two clear aspects: general confusion and uncertainty. Instead, we’re going to Ruminate about allocating risk and assigning responsibilities in situations where no party is at fault.

In our leases, we already accept that risk is and can be allocated for events, not in the control of a party. Think about negotiated provisions dealing with a loss of electricity or a temporary roadblock. [Read more…]

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Are The Demised Premises Really Defined The Way You Meant Them To Be?

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It doesn’t matter what we call the space, “Premises,” “Demised Premises,” “Leased Space” or whatever, but what matters is how we define it AND THEN what we do with it. And, when it comes to defining and then using what Ruminations will call the “Leased Space,” our industry doesn’t always do a very good job.

Next week we’ll drag out a 2012 court decision raising some questions about what constituted a particular shopping center, but today just we’ll Ruminate about what should be a simpler question.

One thing that has always puzzled us is what could have been intended when a lease says that the Leased Space means “Store No. 7, as shown on Exhibit A, together with all appurtenances serving Store No. 7.” Then, the lease requires that the tenant maintain the Leased Space.

Now, let’s understand what is meant by an appurtenance. As we see it, it is a pretty fluid term because it is context-sensitive. As applied to real property, it is something subservient to the main property, in our case, “Store No. 7,” but something that attaches to it. What kind of something? Well it could be physical such as an accessory building or loading dock. It could be the rooftop HVAC unit. And, it could be the sidewalks leading to the store, especially those parts that only serve the store. And, as to the foregoing list, it could be that none of them are “appurtenant” to Store No. 7. More importantly, appurtenances would include non-physical “attachments” such as the right to use the parking areas, driveways, delivery roads, and the like. [Read more…]

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You Can’t Cure Them All – Sometimes It Depends On How You Write The Same Obligation

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If, three months ago, you failed to carry contractually required insurance for one week, can you cure that breach now? Over the past week, we were thinking about the curability of defaults. And, we weren’t distinguishing between those of landlords or tenants or borrowers or lenders. Our starting point was the common formulation used to define an “Event of Default,” the occurrence of which triggers “consequences.” Here’s an example of the genre: [Read more…]
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