Oh No, What Have I Done? Not A Right Of First Refusal! Here Are Some Common Headaches, But Only A Handful Of Solutions.

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While problems associated with giving or getting Right of First Refusal (ROFR) may vary depending on the subject matter of the right (adjacent space, post-lease expiration renewal, purchase of the underlying property, right to provide financing, etc.), the one problem all have in common is that there is always a mismatch between what the grantee (usually a tenant) would design for itself and what a third party concocts in the form of its own offer.

Let’s give an example based upon a ROFR to lease adjacent space. Assume that a 9,000 square foot tenant has three years to go in its lease term followed by a five year extension option. Conveniently, two adjoining spaces, each measuring 3,000 square feet, become available, one of which is incontestably adjacent to that tenant’s space. [Read more…]

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Asking For Option Rights – Negotiators Need To Be Credible. Let’s Help Them Out.

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Today, from 30,000 feet down to only 5,000 feet, we’re going to ruminate over purchase and expansion rights. We’re not doing any sample lease provisions.

We know from long experience and from a whole bunch of comments to previous postings that there is the following negotiation philosophy: “We really don’t need it; we’ll give it up just for the asking; we’ll ask for it anyway; and, sometimes we get it.” In most cases, that applies to tenant-form leases that include a right of first refusal to buy the property or to expand into adjacent (and sometime non-adjacent) space. Yes, generic provisions that have nothing to do with the “deal” and weren’t part of the letter of intent, even though quite material. Landlord forms often do the same thing when it comes to tenant relocation provisions. We’re not going to address those relocation provisions today. That’s for down the road. [Read more…]

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