• Enter your email address to subscribe to this blog and receive notifications of new posts by email.

    Join 38 other followers

  • Categories

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/

Advertisements

Commercial Tenant Eviction Process

Commercial Tenant Eviction Process

Important Note: This blog entry applies to commercial leases only and does not apply to residential leases.  Residential tenants have broad statutory rights under the Arizona Residential Landlord and Tenant Act.  Eviction of a residential tenant almost always requires court action.  See A.R.S. 33-1301 et seq.

This blog entry describes the process for evicting a commercial tenant in Arizona that is in default due to failure to pay rent or some other lease default. …

To read the rest of this blog entry, click here: http://rrlawaz.com/2011/01/commercial-tenant-eviction-process/

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/

Lease vs. License

Lease vs. License

A client recently asked me to perform a lease review where the title of the document was “License for Commercial Office Space.”   I have seen leases titled “Indenture,” “Agreement,” or “Rental Contract” or “Rental Agreement,” but rarely seen a lease titled as “License.”  Ultimately it does not matter what the document is called.  Only the content of the document is important.  However, the title “lease” or “license” carries certain connotations, and an inappropriate title may cause confusion regarding the rights granted to the user…

You can read the rest of this blog entry at: http://rrlawaz.com/2010/11/lease-vs-license/

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

Return of Security Deposit

Return of Security Deposit

As noted in my prior blog entries, commercial landlords are aggressive about passing through costs to tenants.  Landlords arguably have become too aggressive and pass-through charges inappropriately.  In the security deposit context, this means that landlords are trying to claim damages beyond ordinary wear and tear at the end of the lease term, and landlords are combing the lease documents for other ways to keep the security deposit.  In my practice, I have seen landlords withhold security deposits for borderline reasons, including: (1) past due late charges and interest from late rent payments dating back over a year, where the landlord never invoiced or notified the tenant of the landlord’s intent to collect such charges; (2) charging the tenant for storage and removal of personal property items despite the landlord’s oral agreement to accept such items at lease termination; and (3) the landlord’s determination of reasonable reserves for actual operating expenses, which may be calculated within 90 days after the end of the calendar year (meaning the landlord can hold the security deposit for a very long time).

As a result of commercial landlords’ tactics for withholding of security deposits, tenants are left without recourse except to sue the landlord for wrongful withholding of the security deposit.  Most often, the amount of the security deposit is too low to justify hiring an attorney to initiate a lawsuit for recovery.  So, tenants write angry letters to their landlord, negotiate and settle for less.  There is little disincentive to landlords to wrongfully withhold a security deposit.

In the residential context (in Arizona), a landlord that wrongfully withholds a security deposit may be liable for damages equal to double the wrongfully withheld amount.  See A.R.S. 33-1321(E).  This helps dissuade residential landlords from wrongfully withholding security deposits, or from withholding based on questionable reasons.

In addition to requiring a final walkthrough (as noted here: http://rrlawaz.com/2010/10/final-walkthrough/), commercial tenants should negotiate for double damages for the wrongful withholding of the security deposit. Doing so will aide the tenant in collecting its deposit at the end of the lease term.

Prior to using any language or concepts from this blog entry, consult with an attorney.

Ryan Rosensteel is a real estate and construction attorney licensed in Arizona.  You can contact him at rrosensteel@rrlawaz.com.

Final Walkthrough

Final Walkthrough

Final walkthrough provisions are common in residential leases, but rarely used in commercial leases.  In my commercial leasing practice, I am seeing disputes arise out of the surrender condition of the premises that could be prevented with a final walkthrough and opportunity for tenant to cure…. read the rest of this blog entry at: http://rrlawaz.com/2010/10/final-walkthrough/

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