Complete Property Management Chester Nj

Complete Property Management Chester Nj – Exclusive use clauses are not uncommon in shopping center leases. Tenants often request these clauses to prevent the landlord from renting space to other tenants who are competitors. Ideally, a shopping center includes a diverse mix of tenants that are compatible with, but do not compete with, one another. As such, landlords are not afraid to grant exclusive use to particular tenants, but both landlords and tenants have a number of factors to consider when negotiating such clauses.

A requirement for an exclusive use clause should be included in any letter of intent specifying the commercial terms of the proposed lease. This ensures that the parties do not waste time, effort and money negotiating a letter of intent or preparing a lease without such a requirement only to find out that it is a deal killer later when the issue is raised. It is not necessary to negotiate the entire exclusive use clause in the letter of intent, but it should be mentioned as a requirement to be included in the lease, with at least a basic reference to the type of business the tenant wants to protect from competitors .

Complete Property Management Chester Nj

Complete Property Management Chester Nj

If a landlord or its affiliates own other retail centers nearby, a tenant can sometimes get the landlord to agree that the exclusive use clause will also apply to those other centers, usually within a limited radius around the tenant’s location. This would also apply to future phases of a retail center under construction.

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A tenant that is a national or regional company such as a grocery store or pharmacy chain will routinely require that it be an exclusive use. As a prospective anchor for the center, the company will pay significant rent and potentially attract a lot of customers. An anchor tenant therefore has the leverage necessary to induce the landlord to grant it an exclusive use clause. The anchor tenant will often have their own exclusive use clause to include in the lease, and it will be back to negotiating it.

Tenants normally want the exclusive use clause to be broad and include as many uses as possible that will compete in any way with their business. On the other hand, landlords prefer the clause to be as narrow as possible to avoid limiting the types of other tenants in a center. There will usually be a fair amount of give and take as an appropriate clause is negotiated.

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If the use of the tenant is very narrow, it is quite easy to identify the nature of the competition that is precluded. The more products or services the tenant offers, the more comprehensive and detailed an exclusive use clause becomes. In any case, the exclusive use clause should cover what are considered the “primary” products or services offered.

It is important for both parties that the exclusive use clause is clear and concise. Nor should it inadvertently exclude businesses that do not actually compete with the tenant who wants the exclusive use. For example, a liquor store selling beer, wine and alcoholic beverages for off-premises consumption may wish to exclude other businesses in a center from selling those products. If the other business is a restaurant or bar offering the products to customers for consumption on premises, there is no real competition.

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At times, it is useful to identify specific competitors as included in the list of businesses that the employer will not allow to operate elsewhere in the center. Many tenants have a pretty good idea who their primary competitors are, and while such a list may not be exhaustive, it may be illustrative of the types of business that are prohibited.

Before agreeing to an exclusive use clause in any lease, a landlord needs to know that its other existing tenants have leases that contain relatively narrow permitted uses that do not compete with the new tenant’s business. If an existing lease states that the tenant may operate his premises for “any lawful use,” then the tenant may begin with one use but later convert it to another. Alternatively, the tenant may be entitled to transfer his lease to a new tenant with a different type of business. Landlords will not want these events to trigger a default under an exclusive use clause granted to a subsequent tenant since the landlord cannot control what the previous tenant can do with his premises unless the previous tenant’s lease gives the landlord approval rights for a future use . Landlords should be careful to keep accurate records of permitted uses and exclusive uses under all leases that can be referred to and updated each time a new lease is negotiated.

Likewise, the tenant with whom an exclusive use clause is negotiated should not have the flexibility in his lease to change his use in the future to “any lawful use.” Future prospective tenants may be deterred from leasing in the center if their business would compete with the new or changed use of an existing tenant.

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It is useful to record notices among the public records specifying exclusive uses to tenants. This is usually done with a memorandum of lease. All leases shall require the tenant to comply with recorded covenants and restrictions on the title to the center. This would include any recorded document that grants an exclusive use to a single tenant. If this is done and all the exclusives are recorded, it would not be necessary to specify in each lease what all the exclusives are in the entire center.

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Exclusive use shall be for the duration of the applicable lease. Sometimes notices of exclusive use (even in a memorandum of lease) that are recorded in the public records only say that no other tenant will use its premises for a particular type of business, but they do not say how long the restriction lasts. If the lease with the tenant to whom the exclusive is granted is terminated or expired, the exclusive use shall automatically terminate.

A tenant with an exclusive use clause will expect the landlord to use reasonable efforts to enforce the clause if another tenant operates a competing business that is covered. Landlords who do not comply may be found in breach of the affected tenant’s lease. Since a contractual agreement with the competitor does not exist, the tenant usually cannot bring a legal action against his competitor. The tenant’s only remedy is to make a claim against the landlord under the lease.

The affected tenant should be able to request the landlord to request a competing use by obtaining a court order requiring it to cease. This can take time, so the affected tenant will also want other remedies, such as the right to terminate his lease and recover damages or to keep his lease in effect and reduce his rent by an agreed amount (even if based on a formula). Damages may include the tenant’s investment in the leased space and relocation costs if it terminates the lease. It may also be possible to recover more if a new and equivalent space elsewhere costs more to rent.

For the tenant, the remedies should include damages in an amount significant enough to deter the landlord from willfully breaching the exclusive use clause. If not, the landlord can break it simply because you can get enough additional rent from the competitor to cover damages for the affected tenant. Additionally, a tenant’s damages should be large enough to deter the landlord from deliberately breaching the exclusive use in order to withdraw the space, even if the rental rates are significantly higher. Otherwise, the higher rental rates will provide the landlord with enough extra money to cover the lower damages.

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The bottom line is that exclusive use clauses present multiple issues that require careful consideration in negotiating and drafting, but they usually receive less attention than they deserve. This article is intended to provide only an overview of the subject matter and does not address all of the issues that can arise when addressing exclusive use clauses. It is therefore important to consult with an experienced real estate attorney when negotiating such a lease.

This article is informative only. You should consult an attorney before acting or failing to act. The law can change quickly and no warranty is given. LOWNDES DISCLAIMS ALL IMPLIED WARRANTIES AND WITHOUT LIMITATION, ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. All articles are provided as is and with all faults. Consult a Lowndes attorney if you wish to establish an attorney/client relationship.

With more than 30 years of experience in real estate law, including over 20 years as a board-certified expert in the field, Gary Kaleita has acquired the ability to navigate the complexities of sophisticated real estate deals with relative ease.

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Gary has a wide variety of experience in real estate development, finance and transactions, condominiums, property owners associations, commercial leasing, commercial lending and title insurance.

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Gary enjoys a reputation for anticipating and avoiding problems, rather than merely reacting to them. He has years of experience handling purchases, sales and finances of commercial and residential projects, including office, industrial, retail, multi-family, single-family, condominium, resort, hotel and golf course properties.

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Halo, Saya adalah penulis artikel dengan judul Complete Property Management Chester Nj yang dipublish pada August 29, 2022 di website Smallcave

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