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Commercial Leasing Law & StrategyLJN NewslettersNewsSections

Use of the Premises

By Harvey M. Haber
February 26, 2014

The importance of the use of the premises to both the landlord and the tenant cannot be sufficiently stressed. In order to carry on its business, the tenant wants to sell the broadest possible scope of merchandise that is currently in vogue or (in the tenant's opinion) will be. The landlord, however, wants the use clause specifically limited, not only to avoid any overlap of uses among the tenants in its shopping center, but also to avoid violating any restrictive covenant (i.e., a covenant the landlord has given to a tenant whereby that tenant, and no other tenant, has the exclusive right to sell a specific item or items in the shopping centre) given to any other tenant. In addition, the landlord wants a narrow clause because the use clause will also govern the use of the premises in the event of an assignment of the lease or a sublease of the premises (unless the landlord and the tenant mutually agree to a change in the use clause), which, of course, is important in the event the tenant wishes to sell the business.

In today's changing times, there is difficulty first in determining what the store is and, second, attempting to define what it sells. For example, today's drug stores, in many instances, are becoming large variety stores with a pharmacy; variety stores are becoming junior department stores; junior department stores are becoming department stores; and supermarkets are becoming combination food and general merchandise stores. In addition, the concept of hybrid retailing has emerged. A hybrid retail tenant sells in its premises goods that are entirely unrelated to one another (such as food and clothing) ' which makes it that much more difficult for a landlord to preserve its tenant-mix in the center.

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