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Negotiating Relocation Rights
A relocation provision, in its simplest description, is a contractual right in a commercial lease that permits the landlord to relocate a tenant to another space. Even without further explanation, one can imagine how having such a provision in a commercial lease would be problematic for a tenant. However, despite the apparent risks, relocation provisions are frequently not a potential tenant's priority concern when negotiating the business points of a lease.
This is a serious oversight. Signing a lease with an overly broad relocation provision can lead to many issues if the landlord elects to exercise its right to relocate the tenant.
The Landlord's Perspective on Relocation Provisions
A relocation provision allows a landlord the flexibility to uproot a tenant from its leased space and relocate them to another space for the remainder of the lease term when the need arises. A landlord may choose to exercise its option to relocate a tenant for a number of reasons but, very often, these rights are exercised to make room for a more desirable tenant. Another possibility is that a reputable tenant already has a lease with the landlord and wants to expand into another space that is currently occupied but is subject to a relocation provision. Further, building redesign and construction could cause a landlord to exercise its relocation rights.
Relocation provisions are typically found in leases for commercial spaces within shopping centers, malls, strip malls, office buildings and larger mixed-use buildings. Ideally, for a landlord, the relocation provision will be exercisable within the landlord's sole discretion, at tenant's cost, and subject to few or no conditions. Assuming a tenant finds it necessary to agree to a relocation provision, the tenant's negotiation of the terms of that provision will dictate how onerous that clause becomes.
Elements of the Relocation Provision
While the language of the lease is critical, landlords are subject to some broader controls in enforcing relocation provisions. In Bright Horizons Children's Centers, LLC v. Riverway Midwest II, LLC, 403 Ill. App. 3d 234 (2010), a landlord attempted to relocate a ground floor children's care center to another floor of the building, but the court found that local codes prohibited the enforcement of that clause.
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