1. home and garden

April 2009
The Practical, Plain-English Newsletter for Owners, Managers, Attorneys, and Other Real Estate Professionals
inside this issue
Model Lease Language: Use
Reasonable Formula to Calculate
Compensation for Loss of Use. . . . . . . . 3
Plugging Loopholes: Limit
Franchisor’s Ability to Freely
Assign and Sublet . . . . . . . . . . . . . . . . . . 5
➤ Model Lease Clause: Limit
Number of Franchisor Sublets
or Assignments (p. 6)
Recent Court Rulings. . . . . . . . . . . . . . . . 7
➤ Tenant Must Comply with
Renewal Language
Tough Markets Call for More
Sensitive Owners
Although there are tenants out there
that are looking to lease commercial
space, in today’s economy they’re much
harder to find and, in some cases, even
harder to maintain. That was one of the
results of a spotcheck on the state of the
industry conducted by the Insider.
Experts say that the reality, whether
most owners like it or not, is that they
have to be sensitive to what their tenants are experiencing. And if there’s
something that they can do to help them
succeed, they should step up and do it.
The key, however, to being able to
offer assistance to struggling tenants is
actually having knowledge of their situation. The owners that we’ve spoken to
say that one of the main problems they
face is trying to save tenants who have
waited too long to let them know that
they are in trouble. That is why it is
so important for property owners and
managers to keep in touch with their
tenants on a regular basis, so they can
get some insights into their tenants’
financial health.
fe ature
Cover 13 Points When Negotiating
Garage Leases
If you haven’t negotiated a garage lease recently, you may find that
there are numerous matters that you must pay particular attention
to during negotiations. Unlike most commercial leases, garage leases
contain an array of unique issues that are not commonly encountered
in a typical leasing transaction, says New Jersey real estate attorney
Mark Morfopoulos. “It would be a big mistake to assume a garage
lease is ‘just a lease,’” he warns.
To avoid overlooking a key issue, Morfopoulos suggests negotiating the following 13 provisions in your garage lease.
Description of Premises
A description of the premises is an important clause in all leases. It is
no less important for a garage lease. Make sure the garage premises
include all parking attendant buildings and restroom facilities, if any,
constructed within the garage, and all easements, rights, and appurtenances to the land (including abutting and appurtenant sidewalks,
driveways, curb-cuts, and alleyways for travel and staging). Also,
(continued on p. 2)
R e n t Pa y m e n t s
How to Protect Against Bounced
Rent Checks
Bounced rent checks are a major hassle. Your bank will charge you a
fee for a bounced check, and then you will have to spend more time
actually collecting the rent from the tenant. Also, by the time you
redeposit the bounced check or get a new one from the tenant, the
rent is way overdue.
Standard lease remedies often are no help, and it may not be in
your best interests to use harsher remedies like terminating the lease
and evicting a tenant. And collecting damages from the tenant may
not be enough of a deterrent to stop it from being careless and/or
bouncing another check.
(continued on p. 6)
­2
C O M M E R C I A L L E A S E L A W i n si d er ® B O A R D O F A D V IS O RS
Jacob Bart, Esq.
Stroock & Stroock
& Lavan LLP
New York, NY
Stuart D. Byron, Esq.
New York, NY
Harvey M. Haber,
QC, LSM
Goldman Sloan Nash
& Haber LLP
Toronto, ON Canada
Richard F. Muhlebach,
cpm, csm, cre
Woodinville, WA
Neil T. Neumark, Esq.
Dykema
Chicago, IL
Neil B. Oberfeld, Esq.
Isaacson Rosenbaum P.C.
Denver, CO
Carole L. Pechi, Esq.
Laude Pechi Law LLC
Abraham Lieberman, Esq. Glen Ellyn, IL
Stumphauzer, O’Toole,
McLaughlin, McGlamery Professor Patrick
Randolph
& Loughman Co., LPA
UMKC Law School
Sheffield Village, OH
Of Counsel, Husch
Marek W. Ludwig, Esq.
Blackwell Sanders
General Growth
Kansas City, MO
Properties, Inc.
Robert P. Reichman, Esq.
Chicago, IL
Siller Wilk LLP
Susan Fowler McNally, Esq. New York, NY
Gilchrist & Rutter P.C.
Marc L. Ripp, Esq.
Santa Monica, CA
Mack-Cali Realty Corp.
Stephen J. Messinger, Esq. Paramus, NJ
Minden Gross LLP
Mark A. Senn, Esq.
Toronto, ON Canada
Senn Visciano
Jeffrey A. Moerdler, Esq. Kirschenbaum P.C.
Mintz Levin Cohn Ferris Denver, CO
Glovsky and Popeo P.C.
Winnifred C. Ward, Esq.
New York, NY
Downey Brand LLP
Sacramento, CA
Editor: Arthur Guess
Executive Editor: Heather Ogilvie
Production Director: Kathryn Homenick
Director of Operations: Michael Koplin
VP & Managing Director: Mark Fried
April 2009
Garage Leases (continued from p. 1)
don’t forget to include access to any other common facilities located
within the building.
Permitted Uses
As with any lease, there’s always the concern that a definition of “Permitted Use” is too expansive and will allow a tenant to use the premises for activities that you either did not contemplate or approve. On
the other hand, a tenant desires the flexibility to utilize the space that
it leases for as many uses as possible. In a garage lease, make it clear
that the premises are to be used for “the parking and storage of passenger motor vehicles only.”
You should not permit non-passenger vehicles to be stored in the
garage. Among the many reasons such vehicles should be prohibited is
that they weigh more than cars and can damage the facility. Even if the
garage could conceivably hold a non-passenger vehicle, doing so can
increase capital repair and insurance costs and affect the entire building.
Licenses and Permits
Require the tenant, at its expense, to procure, and at all times maintain and comply with the terms and conditions of all licenses and
permits required for the lawful conduct of the permitted uses in the
garage. You should also hold the tenant to the same standard as it
relates to any driveway or sidewalk crossing permits and advertising
and other sign permits.
Practical Pointer: You should agree to cooperate with the tenant in
obtaining any required permits, approvals, or certificates necessary to perform
any work, provided all the costs are borne by the tenant.
Editorial Director: Anita Rosepka
Commercial Lease Law Insider (ISSN 0736-0517) is published by Vendome Group, LLC, 149 Fifth Avenue, New
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Volume 27, Issue 13
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Prior Garage Operations
A tenant may request that you cooperate with it in implementing the
transition of the garage’s operations from the prior operator to the
new tenant, including providing the new tenant with a rent roll and
schedule of accounts receivable for the prior garage operations, if
available. In the event of any holding over by any prior garage operator beyond the scheduled expiration date of that operator’s lease or
other occupancy agreement, you should agree to take all commercially reasonable actions to obtain possession of the garage.
Labor Relations
In many office buildings, owners employ contractors or other laborers who are engaged in the construction, maintenance, or operation
of the building. You should make sure that the tenant will not employ
any contractor or laborer, or permit any materials to be delivered to
or used at the building, which will cause a conflict or interfere with
those individuals employed by you. The tenant should be able to use
its own employees and those of its affiliates as long as those employees do not violate applicable legal requirements or the provisions of
any union contract applicable to building employees.
© 2009 by Vendome Group, LLC. Any reproduction is strictly prohibited.
For more information call 1-800-519-3692 or visit www.vendomegrp.com.
April 2009
­3
C O M M E R C I A L L E A S E L A W i n si d er ® Unavailability
Savvy tenants have inserted a
clause in garage leases that provides for the recognition that at
some point, if an owner has denied
the tenant the right to use a portion of the premises for a certain
number of days during the course
of a particular 365-day period,
the tenant should be compensated
for the loss of business. A provision covering such a scenario will
include a method for calculating
that compensation. For an example of a reasonable provision, see
“Model Lease Language: Use
Reasonable Formula to Calculate
Compensation for Loss of Use.”
Signage
As with most retail operations, the
proprietor of a garage will consider any clause relating to sig(continued on p. 4)
Mod e l L e a s e La n g u a g e
Use Reasonable Formula to Calculate Compensation for Loss of Use
A tenant may insist on including a clause in its garage lease
that provides for the tenant to be compensated for the loss
of business it suffers if you ever deny the tenant the right to
use a portion of the premises for a certain number of days
during the course of a particular 365-day period. Such a
provision should include a detailed, reasonable method for
calculating that compensation. Here is an example of such
lease language, provided by New Jersey attorney Mark
Morfopoulos. Show it to your attorney before using it in
your leases.
Note that the “Threshold Amount” can vary—for
example, from 80 days to 100 days—but the concept is
simple. A garage operator has a business to run, and it
should be compensated if its space is unavailable under
certain limited circumstances.
LOSS OF BUSINESS DUE TO UNAVAILABILITY
a.
For the purposes of this Section, a parking space or spaces in the Garage shall be deemed to
have been made unavailable by Landlord if Tenant is unable to use such space or spaces for
the ordinary conduct of Tenant’s business due solely to Landlord’s performance of repairs,
alterations, or improvements to the Garage or the Building, or Landlord’s breach of an obligation under this Lease to provide services, perform repairs, or comply with Legal Requirements, in each case other than as a result of the negligence or misconduct of Tenant, Tenant’s
agents or Tenant’s customers, delays caused by Tenant, or Unavoidable Delays.
b. For purposes of this Section:
i. “Space Day” means one day’s use of a parking space in the Garage which Landlord
shall have made unavailable as provided in Section (a).
ii. “Threshold Amount” means, for any Lease Year during the Term, one hundred (100)
Space Days.
iii. “Capacity” means the licensed capacity of the Garage for the parking of motor vehicles from time to time, in accordance with applicable Legal Requirements.
iv. “Credit Amount” means, with respect to any Space Day, (A) the annual Fixed Rent
payable by Tenant for such Lease Year, divided by 365, multiplied by (B) one hundred
twenty-five percent (125%), divided by (C) the Capacity.
c.
Notwithstanding anything to the contrary contained in any other provision of this Lease, for
each Space Day in excess of the Threshold Amount occurring in any Lease Year during the
Term, Tenant shall be entitled to apply, as a credit against future installments of Fixed Rent
and Additional Rent payable by Tenant under this Lease, an amount equal to (i) the number
of Space Days in excess of the Threshold Amount, multiplied by (ii) the Credit Amounts applicable to such Space Days.
d. By way of example only, if during the second Lease Year, there shall have been 120 Space
Days, and the Capacity were 160, then Tenant would be entitled to a credit against Fixed Rent
in an amount equal to:
i. Fixed Rental Amount ($386,250.00) divided by 365 = $1,058.22;
ii. multiplied by Number of Space Days over Threshold Amount (i.e., 20 Space Days) =
$21,164.38;
iii. multiplied by 125% = $26,455.48;
iv. divided by 160 (the Capacity) = $165.35.
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­4
April 2009
C O M M E R C I A L L E A S E L A W i n si d er ® Garage Leases
sary, to prevent structural damage
to the garage and the building.
nage very carefully. The ability for
potential patrons to see the garage
owner’s sign(s) is a crucial element
in determining the success of its
business. You should require your
approval for all signage. However,
be prepared for the tenant to ask
that you not unreasonably withhold, delay, or condition your consent. This is a reasonable request.
Usually such a clause requires
the tenant’s operations to be performed in accordance with the
quality standards applicable to
parking facilities located in firstclass office buildings in the location in question. Many leases will
also require the tenant to paint the
entire garage on or about the end
of every third lease year in colors
and in the manner subject to the
owner’s prior approval.
(continued from p. 3)
Some owners have tried to
add a provision pertaining to
interior signage, but that may be
overreaching. Another approach
to regulating interior signage
could be to state that approval is
“deemed granted” if the signage
is consistent in quality and design
with signage existing at another
suitable location—such as within
a five-block radius of your garage,
or other signage at your property
or immediately neighboring properties—as of the date of the lease.
The best approach would be for all
parties to pre-approve the signage
before the lease is signed.
Tenant’s Repair and
Maintenance
This is a heavily negotiated clause
in most leases. In garage leases,
especially in areas with colder climates, owners believe that a tenant should acknowledge that the
prevention of structural damage to
the garage and the building resulting from the accumulation of road
salt and similar automobile-borne
substances is a significant concern
to the owner.
To minimize the presence of
such substances within a garage,
some owners require the tenant to
agree that it will thoroughly wash
and flush the floors, ramps, ceilings, and walls of the garage not
less frequently than once every six
months, and more often if neces-
Understanding that concrete is
porous and fluids dripping from
the vehicles within the garage can
damage the facility or be absorbed
into the concrete are also important factors in deciding who
should be responsible for repair
and replacement obligations of the
garage structure.
Insurance
The insurance provisions of any
lease should be scrutinized carefully. One provision that is typically not in any other type of lease is
a clause requiring “garage keepers
legal liability insurance” for fire
and explosion, automobile theft,
riot, civil commotion, malicious
mischief, and vandalism.
If you are not sure as to the
amount of such coverage that
should be required, adding that
the limits should be the same as is
“customary in similar garages in
the City of __________” is one way
of handling the issue. Consult your
insurance agent for further information with respect to this type of
coverage.
Parking Rates
A tenant wants the unfettered right
to establish hourly, daily, monthly,
and other parking rates and charges for ancillary services provided
in the garage. However, you should
require the tenant to get your
approval first and should stipulate that rates and charges must
be consistent with those charged
by parking facilities in first-class
office buildings in the vicinity of
the garage. Also, it is not unreasonable for you to require a tenant to comply with all applicable
governmental requirements with
respect to parking rates.
Practical Pointer: In addition,
some owners ask for limited free
parking privileges for themselves
and reduced rate accommodations
for building tenants.
Other Parking Facilities
If you are a larger owner, you may
run your own garage operations
nearby. In those cases, it would
be wise for you to require the tenant to acknowledge that you, your
principals, affiliates, or related
parties may currently or in the
future own, lease, manage, or operate, or have ownership or other
interests in, other parking facilities
that may now or in the future compete with the garage without any
accountability to the tenant.
Standards of Operation
This is a hot button for many owners, as they believe that tenants
should recognize that the reputation and operation of the building
as a first-class office building is an
extremely valuable asset. The services furnished by the tenant under
the lease are and will be identified
by the occupants of the building,
invitees, and the general public
with the owner and the building
and are inseparable in the minds of
such individuals with the services
and reputation of the owner.
Therefore, you should insist
that since the tenant’s services
and personnel—including their
demeanor, dress, and/or uni-
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April 2009
­5
C O M M E R C I A L L E A S E L A W i n si d er ® form—are of utmost importance
to you, all of tenant’s policies
should conform to the standards
of operation of comparable buildings in the area.
Parking Lifts
A tenant may want to add a clause
in the lease that allows it to install
vehicle lifts on the premises, provided that such installation is
lawful and performed in compliance with all applicable laws,
rules, codes, and regulations. As
an owner, you probably shouldn’t
offer this right. Lifts essentially
allow the tenant to crowd more
cars into the garage, and with
more cars (and the actual lift
devices), comes more possibility of
damage. Also, lifts can be dangerous, and the risk of someone getting injured is much greater than
the risk involved with a traditional
parking lot.
However, you should understand that the benefits to the
tenant can be substantial. Knowing the value of such a right, if
you decide to allow the tenant to
install the lifts, you should require
the tenant to pay a monthly fee to
permit it to install and use the lifts.
Insider Source
Mark Morfopoulos, Esq.: Real Estate Attorney, Meislik & Meislik, 66 Park St., Montclair,
NJ 07042; (973) 783-3000; mmorfopoulos@
meislik.com.
For more information, visit
www.commerciallease
lawinsider.com
Search Our Web Site by Key Words:
garage lease; parking garage; parking lifts
P l u g g i n g Loo p h o l e s
Limit Franchisor’s Ability to Freely Assign and Sublet
Franchisor tenants in today’s market are demanding that their leases
give them ample freedom to sublet or assign to any franchisee they
choose without your prior consent.
Franchisors make this demand
because they don’t want you putting any limitations on which franchisees they can do business with.
Keeping control of your building is key, but if you want to maintain low vacancy levels, you might
have to compromise. A good way
to do that is to give the franchisor
tenant the right to sublet or assign
if the franchisee meets certain
financial criteria and business criteria spelled out in the lease. This
compromise protects you from
undesirable franchisee tenants, but
it still leaves a significant loophole.
If you agree to grant the right
in exchange for ensuring that the
franchisee tenant meets specified criteria, there’s nothing to
stop the franchisor from subletting or assigning the space multiple times—in essence turning
the space into a revolving door for
franchisees. This repeated change
in franchisees can create havoc in
your building or center.
To protect yourself against the
revolving door situation, limit the
number of times a franchisor can
sublet or assign the lease to a new
franchisee without your consent,
says New Jersey attorney Kathleen
S. Cook.
Franchisor Could Use
Space to Generate Fees
It’s not uncommon for a store to fail.
The harsh reality is that some stores
just don’t work in certain areas—
like a ski shop two blocks away from
Miami Beach. But that might not
stop a franchisor from opening a
store that it knows more than likely
won’t be successful and subletting or
assigning it to a franchisee.
A franchisor generates a great
deal of its income from the franchisee fees that it collects from
each new franchisee. So, even
though the Miami Beach ski shop
will probably fail, the franchisor
could simply find another unsuspecting franchisee to move in and
take over the business—and collect a fee each time. The franchisor could simply sublet to the new
franchisee, or in an assignment
situation, get the old franchi-
see to assign the lease back to it
then assign it to a new franchisee,
explains Cook.
Even though the business itself
is a failure, the franchisor still
makes money off the franchise
fees. In fact, the greater the turnover of unsuccessful franchisees,
the more franchise fees the franchisor can collect.
Aside from the ethical problem you might have with watching a franchisor collect fees from
unsuspecting franchisees, repeated
changes in management and closings and re-openings of the store
could have a negative effect on your
shopping center, says Cook. And on
top of that, if you are collecting percentage rent, a failing tenant isn’t
going to be able to pay you much.
Limit Number of ConsentFree Sublets or Assignments
To protect your building or center,
as well as your bottom line, limit
the number of times the franchisor tenant may sublet or assign the
lease without your consent. Cook
suggests starting off reasonably
(continued on p. 6)
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­6
April 2009
C O M M E R C I A L L E A S E L A W i n si d er ® Plugging Loopholes
(continued from p. 5)
by allowing the franchisor to sublet or assign the lease without your
prior consent only once to a franchisee (and only to a franchisee
that meets certain criteria spelled
out elsewhere in the lease) [Clause,
par. a]. By limiting the number of
consent-free sublets and assignments, you’ve made it impossible
for the franchisor tenant to have a
revolving door of franchise operations by putting in franchisee after
franchisee into the space without
your consent.
Franchisors may push back
against this one-shot restriction.
Mod e l L e a s e C l a u s e
Limit Number of Franchisor Sublets or
Assignments
The following lease clause was drafted by New Jersey attorney Kathleen S. Cook. Use this clause when you’ve agreed to let your franchisor
tenant sublet or assign to a franchisee without your consent—provided
the franchisee meets certain criteria that you’ve spelled out in the sublet/
assignment section of the lease. Check with your attorney before adding
this clause to your lease’s assignment and sublet section.
SUBLET/ASSIGNMENT TO FRANCHISEE
a.
Limit Number of Sublets/Assignments Without Consent. Landlord
acknowledges that Tenant is a franchisor and intends to either assign
the Lease or sublet the Premises to a franchisee. Accordingly, Tenant
shall have the right [insert #, e.g., one (1)] time [s] only during the Lease
Term to assign the Lease or sublet the Premises without Landlord’s
prior consent to a franchisee that meets all of the criteria set out in
Paragraph [insert # of lease par. that sets out financial and business
criteria and # of lease par. that requires tenant to give landlord the
assignee’s or subtenant’s name and address].
b. All Other Assignments/Sublets Subject to Landlord’s Consent. After
the [insert #, e.g., first] assignment of Lease or subletting of the Premises
to a franchisee, as the case may be, all future assignments of the Lease
or sublets of the Premises shall be subject to Landlord’s prior consent in
accordance with the general provisions of this Article [insert # of lease
section on assignment/subletting], excluding Paragraph a above.
Rent Payments
(continued from p. 1)
How to Get Bounce-Proof
Protection
There’s a good way to nip this problem in the bud, says Atlanta attorney Jeremy D. Cohen: State in your
lease that if the tenant gives you a
check that isn’t honored by the bank
on which it is drawn, you may—at
your option—require the tenant to
make all its subsequent rent (and
additional rent) payments over a
set time period by a bounce-proof
method, such as by certified check.
Here are five important tips to
remember when drafting this lease
language, says Cohen:
Cover all tenant checks. Make
sure to cover all checks—not just
the rent checks. You want to be able
to enforce the language if the tenant’s check for its share of operating expenses or taxes doesn’t clear.
Cover any check not honored by
the bank. It’s important to cover
any check not honored by the bank.
This means more than just bounced
checks—that is, checks that were
If that’s the case, compromise and
give them two or three consentfree sublets or assignments—especially if the lease is long term (10 to
15 years).
After the consent-free sublets or
assignments are used up, the franchisor must get your consent to
any future sublet or assignment to
a franchisee—just as it would have
to with any non-franchisee subtenant or assignee [Clause, par. b].
Practical Pointer: It’s also
a good idea to bar any store from
closing during the changeover of
subtenants or assignees. The point
is to prevent disruptive closings and
re-openings of the franchise. To
do this, have the lease require the
franchise business to stay open and
be adequately staffed continuously
during the sublet or assignment
transition. Also, you could require
the franchisor to hire a manager to
run the business during the interim.
Insider Source
Kathleen S. Cook, Esq.: Beattie Padovano,
LLC, 50 Chestnut Ridge Rd., Ste. 208, Montvale, NJ 07645; (201) 573-1810; KCook@
beattielaw.com.
For more information, visit
www.commerciallease
lawinsider.com
Search Our Web Site by Key Words:
franchise; assign; sublet; consent
rejected because there wasn’t
enough money in the account.
There are multiple reasons for a
bank to refuse to honor a check.
For example, the tenant may have
forgotten to sign the check or may
have written it incorrectly.
Describe types of acceptable
payment. What types of bounceproof payments should you accept?
You may want to give the tenant
a choice of some or all of the following options: certified check,
cashier’s check, money order, or
wire transfer.
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April 2009
Apply to at least 12 months of
payments. Make the requirement
cover all payments from the tenant for the next 12 months. If you
impose the requirement only on
the next one or two payments, it
loses its effectiveness, says Cohen.
Exercise requirement at your
option. Make sure you state in the
lease that you can exercise this
requirement at your option—that
is, you don’t have to require the tenant to pay by any of the alternative
methods. Depending on your relationship with the tenant and the
tenant’s payment history, you may
want to give the tenant a break on
a bounced check. But at least, by
preserving the right to choose, you
have options.
Add Language to Lease
To implement this requirement,
add the following language to the
“remedies” section of your lease:
Model Lease Language
If any check given to Landlord by
Tenant shall not be honored by
the bank upon which it is drawn,
­7
C O M M E R C I A L L E A S E L A W i n si d er ® Landlord, at its option, may require
all payments made by Tenant to
Landlord over the next twelve (12)
months to be by [insert method:
certified check, cashier’s check,
money order, wire transfer].
Is This Request Reasonable?
In Cohen’s experience, smaller tenants usually agree to this type of
request. Most of the resistance
comes from larger tenants or tenants
with substantial negotiation power,
not wanting to go through the hassle
of getting certified checks or money
orders each month. The upside to
dealing with the better positioned
tenants is that they are less likely
to bounce a check. And if they do
bounce a check, you should consider
terminating their lease, as that’s a
fairly clear sign that they are struggling financially.
Also, make sure the lease says
that you’re entitled to any other
remedies available to you under the
lease—or the law—if the tenant’s
rent is paid late. Then, for example,
you can still treat the late payment
of rent as a lease default and try to
evict the tenant.
Practical Pointer: Make sure
your lease clearly states elsewhere
that the tenant will pay any costs you
incur in connection with a bounced
check, for example, a bounced check
fee charged by your bank. This obligation should apply regardless of
whether you require the tenant to pay
by certified check in the future.
Insider Source
Jeremy D. Cohen, Esq.: Hartman, Simons,
Spielman & Wood, LLP, 6400 Powers Ferry
Rd. NW, Ste. 400, Atlanta, GA 30339; (770)
955-3555; [email protected].
r
For more information, visit
www.commerciallease
lawinsider.com
Search Our Web Site by Key Words:
bounced check; default; rent; wire
transfer
r e c e n t co u r t r u l i n g s
➤ Tenant Must Comply with Renewal
Language
Facts: A tenant signed a lease with the city that contained several 10-year renewal options. The lease stated that prior to exercising the option, the tenant must
give a six-month notice of its intention to renew.
The tenant eventually defaulted on the lease, and
a receiver was appointed to manage the property.
The receiver handled the day-to-day operations and
finances for the property, but mistakenly overlooked
the six-month notice deadline, as required by the
lease. After missing the notice, the receiver contacted
the city to inquire about the rent for the next 10-year
term. The city provided the receiver with the information, but did not mention the notice oversight. About
two weeks later, the city sent a notice, informing
the receiver that it had missed the deadline and had
become a holdover tenant.
The receiver filed a notice with the court to clarify its lease status. The trial court, based on circumstances that it deemed relevant, ruled in favor of the
tenant and ruled that the lease had been renewed.
Specifically, the court said that “the City should have
understood from the receivership proceedings that
everyone intended for the lease to continue for at least
10 more years.” The city appealed.
Decision: An Ohio appeals court reversed the trial
court’s decision and ruled in favor of the city.
Reasoning: The court ruled that because the lease
contained unambiguous terms that clearly defined
the process required to renew the lease, the receiver
had a responsibility to follow the notice requirements,
regardless of the city’s knowledge or the receivership
proceedings.
■
Fifth Third Bank Western Ohio v. Carroll Building Co., January
2009
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The Complete Guide To Shopping Center Management
2008
The Complete Guide to Shopping Center Management
The Complete Guide to
Shopping Center
Management
2008
The Complete Guide To Shopping Center Management provides the practical help you
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The Complete Guide to Shopping Center Management provides commercial real estate
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From the Publishers oF
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Get rent paid on time, in full
Reduce problems with CAM charges
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Control sublets and assignments
Guard against contractors overbilling,
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Reduce parking lot crimes and accidents
Track key lease dates and deadlines
Protect yourself from liability suits
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