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Holdover Tenancies (Revisited)

Holdover Tenancies

Last year, I wrote the following blog entry on holdover tenancies and the right of the landlord to collect an increased rent rate during any holdover period:  http://rrlawaz.com/2010/07/holdover-tenancies/   The increased rent rate is typically 125% – 200% of the last month’s rent rate.

From the landlord’s perspective, the right to collect increased holdover rent serves two primary purposes: (1) the increased rent allows the landlord to recapture some of the damages associated with a tenant’s failure to timely surrender the premises, and (2) the increased rent provides a disincentive to the tenant to wait until the end of the lease term to negotiate for a lease extension.  Both of these purposes assume that the tenant is not welcome to continue as a month-to-month tenant upon lease expiration and that the landlord has a tenant ready to move into the premises upon lease expiration.

Read the rest of this entry at: http://rrlawaz.com/2011/07/holdover-tenancies-revisited/

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Recapture of Abated Rent If Tenant Defaults

Recapture of Abated Rent If Tenant Defaults

In today’s market, it is common for landlords to give fully or partially abated rent as a lease concession to tenants.  Occasionally the abated rent is staggered throughout the term (e.g., one month’s rent is abated every year), but more often the abated rent is front-loaded at the beginning of the term.  Abated rent is factored into the overall economics of a lease deal, based on the tenant’s payment of rent during the entire length of the term.  Landlords should make sure that the lease allows the landlord to recapture the abated rent in the event of a tenant default.

Read the rest of this blog entry at: http://rrlawaz.com/2011/05/recapture-of-abated-rent-if-tenant-defaults/

This blog has permanently moved to: http://rrlawaz.com/blog/

Existing Superior Rights to Additional Space

Existing Superior Rights to Additional Space

When negotiating a right to additional space (e.g., expansion right or right of first refusal or first offer), tenants should confirm with the landlord that no superior rights exist to the same additional space.  If other rights do exist, those rights will be superior and the tenant’s right will be subject to the existing rights.  Typically, a tenant assumes that its rights are exclusive or superior to any other rights.  That may not be the case.

Read the rest of this blog entry at: http://rrlawaz.com/2011/05/existing-superior-rights-to-additional-space/

This blog has permanently moved to: http://rrlawaz.com/blog/


Relocation Rights

Relocation Rights

Landlord-form commercial and retail leases frequently contain a provision that allows the landlord to relocate the tenant to another space in the building or project if desired by the landlord. In my experience, over the past three or so years, landlords nearly always have given up this right during lease negotiations. In fact, landlords often delete this provision before delivery of the lease to the tenant for review. As the leasing market begins to rebound, I am seeing landlords hold firm on relocation rights. Accordingly, tenants should understand how to negotiate appropriate limitations on landlord relocation rights.

Read the remainder of this post at: http://rrlawaz.com/2011/03/relocation-rights/

Retail Signage

Retail Signage

Many retail tenants rely on signage to attract customers.  Though general signage rights often are negotiated in the Letter of Intent (e.g., size and location of building façade and monument signs), the design, color and fonts typically require the landlord’s approval, which may be withheld in the landlord’s reasonable discretion.  Depending on whether the signage is critical to the tenant’s operations, the tenant should push for approval of all signage characteristics in advance and specified in an exhibit attached to the lease.

To read the remainder of this blog entry, click on the following link: http://rrlawaz.com/2011/01/retail-signage/

This blog has permanently moved to: http://rrlawaz.com/blog/

Co-Tenancy Requirements

Co-Tenancy Requirements

Due to a variety of factors, several commercial real estate projects have abnormally high vacancy rates.   For retail shopping centers, the high vacancy rates adversely affect current tenants.  Though most commercial projects have an interdependency between the tenants of the project for the overall success of the project, this interdependency is particularly important in retail.  If full, more customers will visit the center.  If half-empty, the center will suffer.

For the rest of this blog entry, click on the following link: http://rrlawaz.com/2010/12/co-tenancy-requirements/

This blog has permanently moved to: http://rrlawaz.com/blog

GPLET Leasing Issues

GPLET Leasing Issues 

In most commercial real estate development projects, the real property is subject to state property taxes.  In triple net leases, those property taxes are passed through to the tenants in the project on a pro rata basis as additional rent.

Cities, towns and other municipalities are able to offer an alternative to property taxes called Government Property Lease Excise Tax (GPLET).  GPLET rates are much lower than traditional property tax rates and often completely abated for the first eight years after completion of construction of the development project.  In order to qualify for GPLET status, the property must be owned by a government entity, and then leased to a developer or other end-user (most often under a long term ground lease).  Several conditions apply in order to qualify for GPLET status, including the property must be in an area designated as a slum or blighted area in accordance with ARS 36-1471 et seq., and the new improvements to the property must increase the value by at least 100% of the original value. 

GPLET has been the source of controversy and recent legislation.  This blog entry will not focus on the controversies or recent legislation, but you can read about it for yourself here: http://www.goldwaterinstitute.org/article/4443 and here: http://www.goldwaterinstitute.org/article/4726.  Instead, this blog entry focuses on the basic considerations for tenants when negotiating leases subject to GPLET instead of traditional property tax rates.

You can read the rest of this blog entry at: http://rrlawaz.com/2010/11/gplet-leasing-issues/

This blog has permanently moved to: http://rrlawaz.com/blog/