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.

With that in mind, if (as is sometimes the case), the Leased Space is defined to include the appurtenances, and the tenant is responsible for maintaining the Leased Space, what besides the store interior becomes the tenant’s burden?

How about those leases that define the Leased Space merely as Store No. 7 and make the tenant solely responsible for maintaining the Leased Space? Is the tenant responsible for the rooftop HVAC unit that exclusively serves that store?

In each case, the parties “know” what they meant, yet they’ve set themselves up for a dispute when one party gets angry at the other or when something really expensive happens. We’re not going to provide “curative” text because we’re sure our readers can do as good a job as we can do. Our only intention is to get our readers to focus on the definition of Leased Space and keep that definition in mind whenever the defined term shows up in the lease. [And, that’s a lot of keeping in mind.]

When leasing an owner’s entire property, it seems easy to define the Leased Space – just attach the property’s legal description. After all, that’s the entirety of what the landlord owns, so what could be simpler? Well, think about the following situation. The property takes up an entire city block and a pedestrian alleges injury by reason of something on the sidewalk. The municipality makes property owners liable for clearing abutting sidewalks. The lease requires that the tenant maintain the Leased Space and to indemnify the (absent) landlord for anything that happens on the Leased Space. So, the landlord feels covered. That is, until someone notices that, in this particular jurisdiction, the sidewalks are not owned by the abutting property owners; they are owned by the municipality. [Often, properties run to the street curbs, and the law gives the municipality a right of way over the sidewalk and grass buffer areas.] The problem here is the same as our “appurtenances” examples: neither the landlord nor the tenant knows what constitutes the Leased Space and what falls outside the Leased Space. That sets them up for arguments over responsibility for maintenance, insurance, indemnification, and a whole lot more.

What about columns or utility chases running through the tenant’s space? Are they part of the Leased Space or not? How about stairwells or elevator shafts?

What are the physical boundaries of the Leased Space? When a tenant is required to maintain the interior of the Leased Space, where does the Leased Space end? Is it on the interior surface of the wall paint? Is the wall paint part of the Leased Space? The drywall? Everything up to the surface of the exterior boundary walls? There may be wires and pipes inside the exterior boundary walls. Some may serve the Leased Space itself; some may not serve any part of the Leased Space, but serve other parts of the project. Are all those part of the Leased Space or are only those serving the Leased Space part of the Leased Space itself? Why?

Frequently, a lease will define the Leased Space to be outlined in “red” or some other color or by crosshatching on an attached drawing. Not infrequently, the drawing is missing or not marked. Sometimes it is marked, but incorrectly. Far more often, the lease copies held by one party (or even all parties) has a photocopy of the drawing, a black and white photocopy.

Whatever approach is taken, even if the red lines are sharply drawn, it is impossible to exactly place boundary lines for a 20,000 square foot space by drawing the outline of a two square inch box on a sheet of paper. Most of the time, it makes no difference. Everybody knows what the space was meant to be, and if the walls are already in place, we “know” the red lines were meant to align with those existing walls. But, how often have we worked with spaces where one demising wall didn’t yet exist (or where none existed)? To which side of the columns was the Leased Space expected to extend? How about the centerline? Who knows?

It’s interesting that when wearing our leasing hats, we tend to be a little loosey-goosey, but when we switch into our condominium gear, we wake up to the issue. For those who haven’t immediately caught our drift, we’ll share a description used to define a condominium unit:

Each Condominium Unit shall consist of all the area on each story of the Condominium, bounded by the perimeter sides, bottom and top of each such story as follows: The bottom of each of those stories shall be the hypothetical plane along and coincident with the lowest point of the interior top surface of the subfloor of such story extending to every point closing with the sides. The sides of each of those stories shall be hypothetical planes along and coincident with the interior unfinished surface of the studding of the perimeter walls, or in case of windows and doors, along and coincident with the exterior surface of the windows and doors located on or within the perimeter walls (the windows and doors being part of the Condominium Unit), extending to every point closing with the bottom, adjacent sides and top of such story. The top of each of those stories shall be the hypothetical plane along and coincident with the exterior unfinished and unexposed surface of the material which constitutes the interior uppermost ceiling of such Condominium Unit, extending to every point closing with the sides of such story, except the top of the uppermost story shall be the bottom of the roof deck above. The above-referenced hypothetical planes shall be deemed to run along lines of construction hypothetically free from human error, and in the case where any such hypothetical plane shall meet any angle of construction of any Common Element (as hereinafter defined), such plane shall run parallel to and with such angle of construction until such plane meets at all points any other hypothetical plane bounding the perimeter of such story. The Condominium Unit does not include the subfloor beneath the basement or beneath any floor within such Condominium Unit.

Each Condominium Unit shall also consist of the doors and partitions and the interior, non-structural or non-bearing walls (partitions) contained within the Condominium Unit and all built-in appliances, fixtures, doors, windows, dry wall, paint, wall paper, floor coverings, fireplaces (if any), tiling, and interior decorated and finished surfaces of the perimeters of each such Condominium Unit, and all other Improvements within such Condominium Unit, and shall also include, without limitation, the following appurtenances to the extent that such serve each such Condominium Unit exclusively: the heating, plumbing and ventilation systems from the perimeter of each Condominium Unit into such Condominium Unit; the hot water heater; electrical wires, fixtures, switches, outlets and circuit breakers; the hearth and the chimney connection, if any; master antenna and telecommunications wiring from the perimeter of each Condominium Unit into such Condominium Unit; utility meters within each Condominium Unit not owned by public or private utilities or agencies; exterior screen doors and doorbells serving the Condominium Unit; the heating, ventilation and air conditioning system servicing such Condominium Unit and that part of the water plumbing systems, sewer systems, electrical systems, gas systems, fire suppression systems, and other utility systems serving only that Condominium Unit and located within the air space of that Condominium Unit.

Overload for a Leased Space? Yes. Instructive? Yes.

What’s the take-away from today’s blog posting? It’s a simple one. It seems that defining (or describing) a tenant’s Leased Space is a necessary evil, only a ministerial task, one that requires little if any thought. But, it isn’t. Words have consequences and one of the most commonly used words in a lease are: Leased Space. When reading a lease, we can’t just skim over those words because, of course, we “know” what constitutes the Leased Space. Frequently, however, what we “know” isn’t what the lease says. Forewarned is forearmed. [That’s a proverb warning us that “prior knowledge of possible dangers or problems gives one a tactical advantage.”]



  1. One of the most commonly overlooked considerations that comes into play in defining leased premises maintenance and repair responsibilities is common area system elements or components such as water lines, sewer lines and sprinkler lines which pass through but do not exclusively serve the “leased premises”, for which a tenant should ordinarily not have a singular responsibility to maintain or keep the same in good repair.

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