Exercising a Renewal Option or SNDA When In Default – Why Not?

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This will not be politically correct, and you can throw this back to me when you see me on the landlord’s side of a lease or the lender’s side of an SNDA. I’ll take that risk because I live by the overriding principle that everything is “bargaining power, everything is priced into the rent or into the deal.” Therefore, fairness is not the deciding factor. Ethical behavior, moral behavior, lawful behavior, politeness – yes, these are all overriding factors, but leases and SNDAs allocate “risk” between the parties, and the topic of this blog entry is a particular kind of risk.

Those caveats having been expressed, I going to pretend that I’ve been hired to fill the role of King Solomon, but there is no baby to be found. I’m being asked to decide what is right or wrong. I take comfort that if the parties to a lease or SNDA decide to do what I think is “wrong,” they’ve “priced” it into the lease or the loan. That’s a convoluted way of saying that parties can accept lease or loan or SNDA provisions that are “wrong” or “unfair” if the overall deal is advantageous. Ralph Waldo Emerson is said to have written: “For everything you have missed, you have gained something else, and for everything you gain, you lose something else.” [Read more…]

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