With the help of some readers, Ruminations is spiraling in on a unified theory about remedies a “violated tenant” might have against its landlord and others for the breach of an exclusive use right granted to the violated tenant in its own Lease. I’m going to start with possible remedies against the landlord because that is the one most discussed in reaching a deal and in negotiating a lease. These are important to lenders and buyers as well because they can also affect the economics of sales and financing transactions. For an example, think about the effect on the shopping center buyer in the Office Depot case discussed in the Ruminations entry of July 25, 2011. [Read more…]
A Unified Theory of Remedies for Breach of an Exclusive Use Right – a Work in Progress.
January 29, 2012 By 2 Comments
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What if it isn’t a Rogue Tenant Violating an Exclusive Use Right?
August 28, 2011 By 3 Comments
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I thought we’d take a break away from the vigorous debate about whether lease renewal (and other) options should be conditioned on the absence of a default, and return to the more mundane discussion about exclusive use right issues.
A number of contributors thought that our industry should have a different name instead of “Rogue Tenant” for a tenant who violates the prohibition, in its own lease, against conducting a use that was granted to another tenant as that other tenant’s exclusive use at the project. You can see those comments at our August 11 Ruminations entry.
What do you call a tenant that is violating another’s exclusive use right, but that isn’t a “rogue tenant”? Absent any knowledge on its part that the other tenant has bargained for an exclusive use right, you probably can say: an “Innocent Violator.” [Read more…]
PrintWhat Is A Rogue Tenant?
August 11, 2011 By 7 Comments
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I’ve struggled over this Blog entry more than any of the ones that have preceded it. That’s probably because I’m not comfortable with how to balance the legitimate needs of both a landlord and its tenant.
Certainly, without a tenant having a remedy for a breach of an exclusive use right granted in that tenant’s lease, the “grant” is mere surplusage. On the other hand, it isn’t always something a landlord did or didn’t do that is responsible for the breach. So, that’s one dividing point – was the landlord “bad” or just another innocent victim?
And, on top of deciding if the landlord was “bad” or “innocent,” there is the question of whether a landlord should have some time to “fix” the problem. If the answer is “yes,” then “how long,” and does the tenant get any kind of relief while waiting to see if the problem gets “fixed.” I’m not going to get to those questions (or others) in this entry. [Read more…]
PrintSelf Evident Truths About Exclusive Use Clauses
August 8, 2011 By 7 Comments
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It is the rare retail project that is unencumbered by exclusive use rights granted by a landlord to one or more tenants. While that may not have been as true in the distant past, this is now the “rule of the game.” What is more, this concept has begun to spill over into the office leasing environment.
Large space tenants have the bargaining power to demand protection against competition within the project. Conceptually, such protection is not unreasonable. Think about it. A large (often specialty) retailer draws customers to its store by dint of its reputation and expensive advertising. Uncurbed, competing businesses would locate “next door” and draw business away just as a parasite would feed on a host. In the office context, there are tenants who don’t want employees and invitees of competing businesses to be present in the lobbies, elevators, and lunchrooms. [Read more…]
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