Rules and Regulations – Another Kind of Lease Amendment

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So, after you’ve fully negotiated a Lease, do you think the words are chiseled into stone, the document is fixed, it is now a “read only” file? Maybe you need to think again. It is not uncommon (how about that for indirectness) for a lease to say: “Landlord reserves the right to, and Tenant agrees that Landlord, at any time and from time to time for the general welfare of the Shopping Center, may impose reasonable rules and regulations governing the Shopping Center and the use of the Common Areas and Tenant shall abide by those rules and regulations..” Yes, it ain’t over ‘til the fat lady sings.

Let’s talk about “Rules and Regulations.” There is nothing wrong, per se, about placing reasonable limitations on a tenant’s use of the property, including on the tenant’s own premises. After all, a lease is a grant of rights to a tenant, and no one believes those rights should be unlimited. And, most of the typical set of Rules and Regulations meet a tenant’s expectations – no smoking; rubber tired wheels on hard flooring surfaces; no shaking carpets out the window. [Read more…]

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CAM and Capital Expenses

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This is long one. Brew that coffee before you delve in.

There is no “law” as to whether Common Area Maintenance Costs (CAM) should include capital costs. It depends on the business deal, and that, in turn depends on the relative bargaining power of the parties and the custom in the locality. Essentially, are capital costs already “in the rent,” or are they to be added, if and when incurred, as additional rent, usually as part of CAM?

Let’s back up. What broad cost categories are tossed into CAM? Put another way, does CAM only cover Common Area items? Most would agree that the Common Areas are those parts of a project (e.g., a shopping center) used in common by each of the tenants and their respective customers, delivery people, etc. Clearly, that includes the parking areas, sidewalks that run from premises to premises, driveways, and even landscaping. It is also generally accepted that liability and property insurance costs, though not strictly for “Common Areas,” are “common costs,” and are reasonably included within CAM. It is less commonly accepted that costs to maintain the roof are common costs, even though the cost of shared HVAC is usually lumped in as a “common cost,” and for convenience, made a component of CAM. [Now, perhaps shopping center people should move over to the “dark side” where the office people hide and replace the term “CAM” with “Operating Expenses” given that very few CAM clauses limit themselves to Common Area expenses.] [Read more…]

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More On The Exercising an Option While In Default Debate – Supplementary Thoughts

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The August 25 Ruminations posting about the right of a tenant to exercise renewal rights or non-disturbance rights even when it is in default engendered a lot of comment, both in on this Rumination site and in a number of Linked-In Group discussions. So, in a departure from past practice, I offer this “supplementary” posting with a generic form of compromise to “Get The Deal Done.” I’m not advocating one position or another with respect to any negotiation. In my role as an attorney, I represent clients, not myself. Attorneys advocate for their client’s desired outcomes. Attorneys are “who their clients are” when engaged as attorneys, though not in their public or private roles.

Ruminate over this: [Read more…]

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