Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Will That Restriction Hold Up?

By Peter J. Marino, Scott A. Miskimon and Lauren H. Bradley
February 28, 2015

For both commercial tenants and landlords, use restrictions are a valuable asset. For the tenant, use restrictions are critical to protecting the value of its business by preventing another tenant from competing for customers in the same shopping center by selling the same or similar goods and services. For the landlord, use restrictions enable the owner to implement its strategy to produce the “tenant mix” it believes will maximize customer traffic and sales, thereby enhancing the value of the property. Given their critical nature to both parties, use clauses, exclusives and prohibited uses are among the most heavily negotiated provisions of any retail lease. As a result, the final draft may contain a number of compromises and vagaries that are understood only by the original parties involved. Moreover, use restrictions are unique due to the frequency with which they are reviewed and referred to during the day-to-day operations of a shopping center, long after the lease has been signed. Use restrictions are a constant topic of conversation among retailers, leasing and management personnel and their attorneys: whether a proposed new tenant is going to create controversy due to restrictions in existing leases, whether to seek or grant a waiver letter to allow a use that would otherwise be prohibited, and so on.

Most disputes over use restrictions are resolved amicably before litigation. However, it is important to understand the legal framework within which the matters would be litigated in court rather than to rely on intuition, even intuition that may have been informed by years of experience in the industry. This article summarizes the most important factors affecting the enforceability of use restrictions, both from a landlord and a tenant perspective.

General Principles of Use Restrictions in Leases

This premium content is locked for Entertainment Law & Finance subscribers only

  • 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

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Major Differences In UK, U.S. Copyright Laws Image

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 Image

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 Image

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 Image

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?

Fresh Filings Image

Notable recent court filings in entertainment law.