Lease Negotiators Need To Be Agents Of Reality And Counselors, Not Just Gladiators

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A good friend of Ruminations contacted us to discuss the kinds of provisions one might include in a retailer’s lease when the floor above it houses a residential apartment. We’re not going to share the “fruits” of that discussion today, but for one. And that one is: “Lease provisions won’t paper over the most common problems.”

The most common problem is related to the reality of the situation. A residential tenant needs more protection from the activities related to a retailer than does the retailer need from the apartment dweller. What is more, just because the retailer may be well within its lease rights to do whatever annoying thing it might be doing, that’s no insulation from continuous complaining by the residential tenant. [Read more...]

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Wave The White Flag – “I Give Up” Agreements For Landlords and Tenants

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Surrender really does mean, “I give up.” And, that’s the case in war and also with respect to leasing. Draw any other connections you’d like, but do so on your own.

At the end of a lease’s term, the tenant is required to “surrender” the leased premises. Yes, “give it up” to the landlord. Though leases may say that directly, there really isn’t any need to do so. That’s just the way it works. All we are going to say about this case of an ordinary, implied surrender is that wise people write down, in the lease, just what the tenant’s return obligations will be – “what condition the leased premises must to be in at the end of the lease’s term.”

Today, we’re going to ramble about early lease terminations and how that relates to the concept of “surrender.” There are basically two ways an early surrender comes about: inadvertently; and by negotiated agreement. [Read more...]

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Crystal Balls And New Solutions To Fire And Condemnation Shortfall Issues

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Our plan for today is to bring some insurance information to the attention of the readers of Ruminations and quickly move on to the rest of our day. So, here’s a warning. Today’s posting will be of immediate interest to a handful (if that) of our thousands of weekly readers. On the other hand, almost all readers will have heard of this first by continuing on, and we’re sure that, as these products are developed, they will solve more and more common problems. Pretty mysterious, huh?

Let’s give this pretty newish insurance coverage a name: “Gap Insurance.” Granted, we’ve borrowed that name from the automobile leasing industry, but the name will prove to be pretty descriptive (after we’ve described the product). Some in the insurance industry are using that moniker as well. [Read more...]

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What Should A Landlord’s Consent To A Sublease Say Beyond: “I Consent?”

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What concerns would a landlord have with its tenant entering into an otherwise acceptable sublease? It isn’t our intention to hypothesize about a landlord’s legitimate concerns about the transaction itself, but only over its details. For today’s posting, we’re assuming that the landlord is consenting to the sublease, but is that the end of the story? We think not.

Fundamentally, absent some agreement between a property-owning landlord and its own tenant’s subtenant, there is no privity of contract between the landlord and the subtenant. Basically, the landlord can’t sue the subtenant for breach of the Master Lease or for breach of the Sublease. They are not parties to the same agreement. [Read more...]

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There’s Only One Form Of Sublease: The One That Fits The Deal

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For reasons that will go unexplained, Ruminations has been thinking, lately, about subleases. It hasn’t been the ins and outs, the details, the clever wording, that’s been on our mind. No, we’ve been taking a step backwards and Ruminating about some conceptual issues, like “what type of sublease?

[There’s a quiz at the end of today’s posting, unrelated to subleasing. Take a gander.]

You see, if you pull a subleasing form out of the “book,” what you get is a document that overlays the underlying lease. A popular local form freely admits to this when it uses such terms as “Overlease” (the tenant-landlord lease already in existence) and “Overlandlord” (the “tenant-sublandlord’s own landlord). [Read more...]

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Why Ground Lease When You Can Sell? Why Ground Lease When You Can Buy?

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A lease is a lease is a lease – or so you may think. Yes, real property leases grant an estate in land to a tenant for a period of time. And yes, the tenant pays for that right of possession. But the action in a lease isn’t in the conveyance provisions; it’s in the contract provisions. That’s right, a lease is a contract. Multiply out the rent and other annual monetary obligations by the length of the lease term (in years), and you’ll see that it might be (and often is) a big dollar contract. Even more important, unlike the vast majority of contracts whose obligations are satisfied in days or weeks, a lease contract goes unfulfilled for a long, long time. And that’s why drafting one requires a special talent and special experience. What’s special? — The ability to see long into the future. [Read more...]

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Give Me A Sentence That Uses Both “Due Diligence” And “Letter Of Intent”

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We needed to think about Letters of Intent because we’ve been asked to join a panel discussion in June and tell all we know. Certainly, we’ll recycle our thoughts from some earlier Ruminations blog postings, notably the ones you might want to revisit or see for the first time by clicking HERE and HERE and HERE. But, what about some fresh thoughts?

Those of us who try in earnest to Get The Deal Done, usually don’t see “the” Letter of Intent until it is signed, sealed, and delivered. (That is, if there even is such a document.) And, when we write, “Letter of Intent,” we’re thinking of those broadly – term sheets, email messages, (literally) jottings on a napkin – whatever. [Read more...]

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Can A Bag Of Dog Food Be A Pet? Can A Bar Of Soap Be A Grocery? Another Unnecessary Fight Over Exclusive Use Rights

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Many readers may remember reading one or even many articles or possibly attending programs growing out of a 2013 United States District Court ruling in a law suit by Winn-Dixie Stores against three “dollar store” chains. Some may even have read that lower court’s decision. Basically, that case explored a number of aspects of a dispute about a supermarket’s exclusive use rights. Ruminations never did a blog posting based on that decision. There were two main reasons. First, we were late to the game; many other got there first. Next, the discussion space got so full, there wasn’t much elbow room for us.

Well, things have changed. The United States Court of Appeals “spoke” on March 5, 2014. You can see the 72 page decision by clicking HERE. We’re not so sure this appellate court got it “right,” though it may have had little choice. Read on.

Today, we’ll review the substance of the exclusive use dispute, and we’ll do a reprise of a frequent Ruminations refrain – say what you mean, and mean what you say. [Read more...]

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