Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
Bridging the Gap: Concepts Useful in Negotiating Commercial Leases
Some of the more contentious provisions in commercial leases have to do with the landlord's right to recapture the leased premises upon an assignment or sublease; relocation of the tenant to other space; co-tenancy; netting of expenses; and acceleration of rent upon a default. Often the parties will be at loggerheads over these provisions and pessimistic that their differences can be bridged. However, there are concepts that can serve to bridge the gap, and this article discusses some of them in the context of those types of lease provisions.
Recapture
The lease provision states:
Except for any assignment or sublease permitted pursuant to Section 21.4 above, in the event of (i) a proposed assignment of this Lease, or (ii) a proposed sublease in excess of fifty percent (50%) of the rentable area of the Premises (singularly or in combination with previous subleases then in effect), Landlord shall have the right, by notice to Tenant delivered within ten (10) business days after Landlord's receipt of Tenant's Proposal Notice (and in lieu of the granting or denial of consent provided for above), to terminate this Lease as to all of the Premises (in the event of an assignment) or as to the proposed subleased portion of the Premises only (in the event of a sublease), in each case for the balance of the Term.
However, the tenant may be a defense contractor entering into a 10-year lease and needing to have the flexibility to sublet space at times during the Term to meet the ebb and flow of contract awards. The 50% threshold is of no help, and the landlord is not willing to limit its recapture rights to assignments or subleases for the remainder of the lease term. What to do? One answer: nullification, as in the following provision:
Notwithstanding the foregoing provisions of this subparagraph to the contrary, if within three (3) business days following delivery of Landlord's notice of termination, Tenant advises Landlord in writing that Tenant nullifies in all respects Tenant's proposed assignment or subletting, as the case may be, then Landlord's notice of termination will be deemed rescinded and the Lease will continue in full force and effect with respect to the entire Premises.
Thus, nullification gives the tenant a chance for a free look at whether the Landlord is going to recapture or not and then, if Landlord does seek to recapture, the opportunity to make the hard decision of whether it is better to hold the space fallow or lose it entirely.
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Removing Restrictive Covenants In New York
In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?