Some issues with leases can be solved pretty quickly so let’s clump a few lease issues together, shall we?
Use:Easy isn’t it? If you are taking about office space it is very easy. Just insert language like this…
The Leased Premises shall be used by Tenant for general office purposes and for no other purpose whatsoever, without the prior written consent of Landlord.
Problem solved. I have never gotten into a protracted lease negotiation that involved “Use” in an office lease.
Retail however, is another story. Insurance companies don’t mind being next to each other in an office building but grocery stores don’t like it when you put there competitor next door. Many anchors require “exclusivity clauses” that limit the shopping center’s ability to lease to a competitor. An example is the Shops at Western Plaza. The Fresh Market is the only grocery store allowed in the center.
For that reason we have to write the “Use” section of the lease for new tenants carefully. A tenant like Hard Knox Pizza will have the use listed as something like this:
The Premises will be used for operation of pizza restaurant, and associated food and beverages and for no other purpose whatsoever, without the prior written consent of Landlord.
Without this language Hard Knox would have the ability, in theory, the change their store to a massage parlor, barber shop or grocery store (or anything else) and the landlord could do nothing about it; even if it did violate another tenant’s exclusivity.
Things to watch for in lease language regarding parking:
- Is the number of parking spaces in the lot listed on the lease? They don’t have to be but if you are tenant that has a lot of walk-in traffic you need some way to protect your employees and customers parking rights.
- Are their plenty of spots for visitor parking? If not, ask for them.
- Do you have reserved parking? What protections do you have from getting those taken away?
- Who has the right to tow cars? The landlord and managing company must have the right to tow illegally parked cars.
Use of the Common Area:
This is one of those common sense things that are in just about every lease. The lobby, restrooms, stairwells, etc…are for the use of the tenant, their employees, agents and guests. Tenants are not supposed to use common areas for conducting business. See…common sense.
As always, if you have questions please feel free to contact me at 865-584-3967 or firstname.lastname@example.org
Next week we delve into….SIGNAGE!
Justin Cazana, CCIM