Recapture Rights. If a tenant "goes dark" for a set period of time defined in the lease, the landlord may be entitled to terminate the lease and recapture the premises. This right may require additional landlord notice and payment of a fee, and might be limited by its terms during the occurrence of a force majeure event. Exclusive Use: If a lease has granted the tenant the right to an "exclusive" for the use of a particular product or service, such right (and the corresponding restriction on the landlord from leasing to another tenant for any use in violation thereof) may be conditioned upon the tenant's continuous active operations in the space as well as the tenant not being in default under the terms of the lease. If a tenant fails to continuously operate, such failure may open a window of time during which the landlord may agree to lease to other tenants for an otherwise restricted use, or terminate the lease and recapture the space of the violating tenant so that the landlord can lease to another tenant for an increased rent. Although it's not likely that many new leases are being signed at this time, tenants and landlords should be well aware of these provisions and should be well versed in the lease terms under which an exclusive may be forfeited. Co- Tenancy Rights/Remedies: Certain leases may grant tenants the right to terminate the lease or reduce rent if the occupancy of a shopping center or retail development falls below a certain occupancy threshold. The rights of the tenant may include rent abatement, reduced hours or even the right to terminate. The impact the coronavirus may have on co-tenancy rights will depend on how the occupancy thresholds are defined and what protections the landlord may have in instances of force majeure events. Rights of Renewal, Expansion, First Offer, Termination: Many leases will condition additional tenant rights such as the right to exercise an option to extend the term, or the right to change the use of the space, on the condition that the tenant is open and operating and will continue to be open for a set period of time in all of (or some defined lesser part of) the premises, or not be in default under the lease. Operating Covenants and Failure to Open: Many retail leases contain a covenant requiring the tenant to continuously operate its business from the premises for the duration of the lease or for a minimum time period and during certain specific hours. This covenant may also require that, while open, the tenant must be fully staffed, fully stocked and use best efforts to operate in a manner to maximize gross sales (this final item being more common in leases containing percentage rent payments). An operating covenant may also include an obligation by the tenant to open for business to the public by a certain date. If the tenant is unable to open due to government order, or it is not realistic or financially feasible for a tenant to staff, stock and open a business during these times, or a tenant is unable to continue and complete its build out by a set date, this situation may trigger liquidated or other tenant damages as well as landlord rights and remedies, including lease termination. Force Majeure: Force majeure and/or excusable delay provisions are often found in leases and typically include conditions such as adverse or extreme weather, casualty, condemnation, war, strike, acts of gods, governmental regulation, etc. As noted above, these provisions usually apply to performance obligations and have traditionally excluded payment obligations. However, it is important to review these provisions to determine if they are broad enough or do cover pandemics and to evaluate what notice, if any, is required for the provision to come into effect. Even with a force majeure provision that requires the payment of rent, some of the performance covenants mentioned above might be tolled if the proper notice is provided to a landlord. What Next? While the COVID-19 pandemic has presented landlords and retail tenants with unprecedented challenges and opportunities, it is important to consider that just because landlords can exercise some of the rights and remedies noted above, whether they should do so is another question. It is critical that the landlord-tenant relationship remain positive and strong in order for both parties to weather this pandemic and succeed in the future. While in most instances, tenants will remain legally obligated to pay rent, in light of the broad impact of COVID-19, landlords should take a number of business considerations into account prior to responding to tenant requests. To the extent possible for both parties, the recommended answer is to focus more on the business behind these landlord/tenant relationships. While understanding that the applicable lease provisions are important, it is likely more prudent to come up with a mutually satisfactory business solution that will not further strain the tenant and the landlord financially in the long term. Given how dependent this analysis is on the language of each lease and with so many novel issues raised by COVID-19 on a daily basis, landlords and tenants are advised to consult with legal counsel about their specific situations before making any final determinations about the actions they should take in the current situation, including the preparation and negotiation of any rent deferral agreements. For more information or questions about your organization's specific lease terms as they relate to COVID-19, contact the authors of this alert or another attorney in Holland & Knight's Real Estate Practice. DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the author of this alert for timely advice. Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.
Appears in 1 contract
Sources: Gym Rental Agreement
Recapture Rights. If a tenant "goes dark" for a set period of time defined If, in the lease, the landlord may be entitled good faith Tenant intends to terminate the lease and recapture the premises. This right may require additional landlord notice and payment of a fee, and might be limited by its terms during the occurrence of a force majeure event. Exclusive Use: If a lease has granted the tenant the right to an "exclusive" for the use of a particular product market or service, such right (and the corresponding restriction place on the landlord from leasing to another tenant for market all or any use in violation thereof) may be conditioned upon the tenant's continuous active operations in the space as well as the tenant not being in default under the terms portion of the lease. If Premises for Transfer, Tenant may provide to Landlord written notice as to its intent to do so, which notice shall include a tenant fails to continuously operate, such failure may open a window of time during which the landlord may agree to lease to other tenants for an otherwise restricted use, or terminate the lease and recapture the space description of the violating tenant so that the landlord can lease to another tenant for an increased rent. Although it's not likely that many new leases are being signed at this time, tenants and landlords should be well aware of these provisions and should be well versed in the lease terms under which an exclusive may be forfeited. Co- Tenancy Rights/Remedies: Certain leases may grant tenants the right to terminate the lease Premises or reduce rent if the occupancy of a shopping center or retail development falls below a certain occupancy threshold. The rights of the tenant may include rent abatement, reduced hours or even the right to terminate. The impact the coronavirus may have on co-tenancy rights will depend on how the occupancy thresholds are defined and what protections the landlord may have in instances of force majeure events. Rights of Renewal, Expansion, First Offer, Termination: Many leases will condition additional tenant rights such as the right to exercise an option to extend the term, or the right to change the use of the space, on the condition that the tenant is open and operating and will continue portion thereof to be open for a set period of time in all of (or some defined lesser part of) the premises, or not be in default under the lease. Operating Covenants marketed and Failure to Open: Many retail leases contain a covenant requiring the tenant to continuously operate its business from the premises for the duration of the lease proposed term (the “Landlord Marketing Notice”). The Landlord Marketing Notice (or if Tenant fails to provide the Landlord Marketing Notice, Tenant’s notice and request for Landlord’s consent to Transfer), shall be deemed to constitute Tenant’s offer to reconvey to Landlord, as of the proposed effective date of the Transfer, that portion of the Premises which is the subject of the proposed Transfer (and in the event of a minimum time period sublease for the term of such sublease), which offer shall contain an undertaking by Tenant to accept, as full and during certain specific hoursadequate consideration for the reconveyance, Landlord’s release of Tenant from all future Rent and other obligations under this Lease with respect to the Premises or the portion thereof so reconveyed. This covenant may also require thatLandlord, while openin the sole and unfettered exercise of its discretion, shall accept or reject the offered reconveyance within five (5) days of the offer, and, if Landlord accepts, the tenant must reconveyance shall be fully staffedevidenced by an agreement in form and substance acceptable to Landlord. If Landlord fails to accept or reject the offer within the five (5) day period then Landlord shall be deemed to have rejected the offer of reconveyance, fully stocked and use best efforts but no such rejection shall be deemed to operate in be a manner to maximize gross sales (this final item being more common in leases containing percentage rent payments). An operating covenant may also include an obligation by the tenant to open for business consent to the public by a certain date. If the tenant is unable to open due to government order, or it is not realistic or financially feasible for a tenant to staff, stock and open a business during these times, or a tenant is unable to continue and complete its build out by a set date, this situation may trigger liquidated or other tenant damages as well as landlord rights and remedies, including lease termination. Force Majeure: Force majeure and/or excusable delay provisions are often found in leases and typically include conditions such as adverse or extreme weather, casualty, condemnation, war, strike, acts of gods, governmental regulation, etc. As noted above, these provisions usually apply to performance obligations and have traditionally excluded payment obligations. However, it is important to review these provisions to determine if they are broad enough or do cover pandemics and to evaluate what notice, if any, is required for the provision to come into effect. Even with a force majeure provision that requires the payment of rent, some of the performance covenants mentioned above might be tolled if the proper notice is provided to a landlord. What Next? While the COVID-19 pandemic has presented landlords and retail tenants with unprecedented challenges and opportunities, it is important to consider that just because landlords can exercise some of the rights and remedies noted above, whether they should do so is another question. It is critical that the landlord-tenant relationship remain positive and strong in order for both parties to weather this pandemic and succeed in the future. While in most instances, tenants will remain legally obligated to pay rent, in light of the broad impact of COVID-19, landlords should take a number of business considerations into account prior to responding to tenant requests. To the extent possible for both parties, the recommended answer is to focus more on the business behind these landlord/tenant relationships. While understanding that the applicable lease provisions are important, it is likely more prudent to come up with a mutually satisfactory business solution that will not further strain the tenant and the landlord financially in the long term. Given how dependent this analysis is on the language of each lease and with so many novel issues raised by COVID-19 on a daily basis, landlords and tenants are advised to consult with legal counsel about their specific situations before making any final determinations about the actions they should take in the current situation, including the preparation and negotiation of any rent deferral agreements. For more information or questions about your organization's specific lease terms as they relate to COVID-19, contact the authors of this alert or another attorney in Holland & Knight's Real Estate Practice. DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the author of this alert for timely advice. Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counselrequested Transfer.
Appears in 1 contract
Recapture Rights. (1) If at any time during the Term of this Sublease, Subtenant desires to sub-sublease all or a tenant portion of the Premises consisting of one floor or more in the Building (the "goes dark" for Proposed Sub-Sublease Space") to an entity other than a set period of time Subtenant Affiliate as defined in Section 18F, Subtenant shall notify Sublandlord of its intention ("Subtenant's Notice"), including proposed terms and conditions for such sub-sublease if such Subtenant's Notice is given pursuant to Section 18E.3 of this Sublease.
(2) If such proposed sub-sublease is for substantially the leasebalance of the term of this Sublease, the landlord may be entitled Sublandlord shall have seven (7) days after receipt of Subtenant's Notice to notify Subtenant in writing of Sublandlord's election to terminate this Sublease with respect to the lease and Proposed Sub-Sublease Space. If, however, Sublandlord fails to notify Subtenant of Sublandlord's election to terminate this Sublease, Sublandlord shall be deemed to have waived its right to recapture the premises. This right may require additional landlord notice Proposed Sub-Sublease Space at such time and payment of a fee, and might be limited by its terms during the occurrence of a force majeure event. Exclusive Use: If a lease has granted the tenant Subtenant shall have the right to an lease the Proposed Sub-Sublease Space to the third party without further notice to Sublandlord. For purposes of this provision, for "exclusivesubstantially the balance of the term of this Sublease" for shall mean that less than six (6) months remain of the use term of a particular product or servicethe Sublease after expiration of the sub-sublease. If Sublandlord gives notice of its election to terminate this Sublease with respect to such Sub-Sublease Space, such right Subtenant shall have three (and 3) days to give notice revoking the corresponding restriction Subtenant Notice.
(3) If the Proposed Sub-sublease Space is not subject to "recapture" under 18.E.2, Sublandlord shall have seven (7) days after receipt of Subtenant's Notice to notify Subtenant in writing of Sublandlord's election to lease the Proposed Sub-Sublease Space on the landlord from leasing to another tenant for any use terms stated in violation thereof) may be conditioned upon the tenantSubtenant's continuous active operations in the space as well as the tenant not being in default under the terms of the leaseNotice. If Sublandlord notifies Subtenant within such seven-day period of Sublandlord's desire to lease the Proposed Sub-Sublease Space, Subtenant and Sublandlord shall enter into a tenant lease on the proposed terms an conditions stated in Subtenant's Notice. If, however, Sublandlord fails to continuously operate, such failure may open a window notify Subtenant of time during which the landlord may agree Sublandlord's election to lease the Proposed Sub-Sublease Space within such seven-day period or, if Subtenant and Sublandlord, through no fault of Subtenant, fail to other tenants for an otherwise restricted useexecute a lease within thirty (30) days after the date of Sublandlord's notice to Subtenant, or terminate Sublandlord shall be deemed to have waived its right to lease the lease Proposed Sub-Sublease Space at such time and recapture the space of the violating tenant so that the landlord can lease to another tenant for an increased rent. Although it's not likely that many new leases are being signed at this time, tenants and landlords should be well aware of these provisions and should be well versed in the lease terms under which an exclusive may be forfeited. Co- Tenancy Rights/Remedies: Certain leases may grant tenants Subtenant shall have the right to terminate lease the lease or reduce rent if the occupancy of a shopping center or retail development falls below a certain occupancy threshold. The rights of the tenant may include rent abatement, reduced hours or even the right to terminate. The impact the coronavirus may have on coProposed Sub-tenancy rights will depend on how the occupancy thresholds are defined and what protections the landlord may have in instances of force majeure events. Rights of Renewal, Expansion, First Offer, Termination: Many leases will condition additional tenant rights such as the right to exercise an option to extend the term, or the right to change the use of the space, on the condition that the tenant is open and operating and will continue to be open for a set period of time in all of (or some defined lesser part of) the premises, or not be in default under the lease. Operating Covenants and Failure to Open: Many retail leases contain a covenant requiring the tenant to continuously operate its business from the premises for the duration of the lease or for a minimum time period and during certain specific hours. This covenant may also require that, while open, the tenant must be fully staffed, fully stocked and use best efforts to operate in a manner to maximize gross sales (this final item being more common in leases containing percentage rent payments). An operating covenant may also include an obligation by the tenant to open for business Sublease Space to the public by a certain date. If third party on substantially the tenant is unable terms stated in Subtenant's Notice without further notice to open due to government order, or it is not realistic or financially feasible for a tenant to staff, stock and open a business during these times, or a tenant is unable to continue and complete its build out by a set date, this situation may trigger liquidated or other tenant damages as well as landlord rights and remedies, including lease termination. Force Majeure: Force majeure and/or excusable delay provisions are often found in leases and typically include conditions such as adverse or extreme weather, casualty, condemnation, war, strike, acts of gods, governmental regulation, etc. As noted above, these provisions usually apply to performance obligations and have traditionally excluded payment obligations. However, it is important to review these provisions to determine if they are broad enough or do cover pandemics and to evaluate what notice, if any, is required for the provision to come into effect. Even with a force majeure provision that requires the payment of rent, some of the performance covenants mentioned above might be tolled if the proper notice is provided to a landlord. What Next? While the COVID-19 pandemic has presented landlords and retail tenants with unprecedented challenges and opportunities, it is important to consider that just because landlords can exercise some of the rights and remedies noted above, whether they should do so is another question. It is critical that the landlord-tenant relationship remain positive and strong in order for both parties to weather this pandemic and succeed in the future. While in most instances, tenants will remain legally obligated to pay rent, in light of the broad impact of COVID-19, landlords should take a number of business considerations into account prior to responding to tenant requests. To the extent possible for both parties, the recommended answer is to focus more on the business behind these landlord/tenant relationships. While understanding that the applicable lease provisions are important, it is likely more prudent to come up with a mutually satisfactory business solution that will not further strain the tenant and the landlord financially in the long term. Given how dependent this analysis is on the language of each lease and with so many novel issues raised by COVID-19 on a daily basis, landlords and tenants are advised to consult with legal counsel about their specific situations before making any final determinations about the actions they should take in the current situation, including the preparation and negotiation of any rent deferral agreements. For more information or questions about your organization's specific lease terms as they relate to COVID-19, contact the authors of this alert or another attorney in Holland & Knight's Real Estate Practice. DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the author of this alert for timely advice. Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counselSublandlord.
Appears in 1 contract
Recapture Rights. If a tenant "goes dark" for a set period Tenant requests Landlord's consent to any assignment of time defined this Lease, any subletting all or substantially all of the Premises, any subletting of all or substantially all of Suite 400 or any subletting of all or substantially all of Suite 300, Landlord will have the right, as provided in the leaseSection 9.03(c), the landlord may be entitled to terminate the lease and recapture the premises. This right may require additional landlord notice and payment of a fee, and might be limited by its terms during the occurrence of a force majeure event. Exclusive Use: If a lease has granted the tenant the right this Lease as to an "exclusive" for the use of a particular product all or service, such right (and the corresponding restriction on the landlord from leasing to another tenant for any use in violation thereof) may be conditioned upon the tenant's continuous active operations in the space as well as the tenant not being in default under the terms portion of the lease. If a tenant fails Premises which is proposed to continuously operate, such failure may open a window of time during which the landlord may agree to lease to other tenants for an otherwise restricted use, be sublet or terminate the lease and recapture the space assigned effective as of the violating tenant so that date Tenant proposes to sublet or assign all or less than all of the landlord can lease to another tenant for an increased rentPremises. Although itLandlord's not likely that many new leases are being signed at this time, tenants and landlords should be well aware of these provisions and should be well versed in the lease terms under which an exclusive may be forfeited. Co- Tenancy Rights/Remedies: Certain leases may grant tenants the right to terminate the lease or reduce rent if the occupancy of a shopping center or retail development falls below a certain occupancy threshold. The rights this Lease as to less than all of the tenant may include rent abatement, reduced hours Premises proposed to be sublet or even assigned will not terminate as to any future additional subletting or assignment as a result of Landlord's consent to a subletting of less than all of the right to terminate. The impact the coronavirus may have on co-tenancy rights will depend on how the occupancy thresholds are defined and what protections the landlord may have in instances of force majeure events. Rights of Renewal, Expansion, First Offer, Termination: Many leases will condition additional tenant rights such as the right Premises or Landlord's failure to exercise an option its termination right with respect to extend the termany subletting or assignment. Landlord will exercise such termination right, or the right if at all, by giving written notice to change the use Tenant within thirty (30) days of receipt by Landlord of the space, on the condition financial responsibility information required by this Article IX. Tenant understands and acknowledges that the tenant option, as provided in this Article IX, to terminate this Lease as to all or such portion of the Premises which is open and operating and will continue proposed to be open sublet or assigned rather than approve the subletting or assignment of all or a portion of the Premises, is a material inducement for a Landlord's agreeing to lease the Premises to Tenant upon the terms and conditions herein set period forth. In the event of time in any such termination with respect to less than all of (or some defined lesser part of) the premisesPremises, or not be in default under the lease. Operating Covenants and Failure to Open: Many retail leases contain a covenant requiring cost of segregating the tenant to continuously operate its business recaptured space from the premises for the duration balance of the lease or for Premises will be paid by Tenant and Tenant's future monetary obligations under this Lease will be reduced proportionately on a minimum time period and during certain specific hours. This covenant may also require that, while open, the tenant must be fully staffed, fully stocked and use best efforts square footage basis to operate in a manner to maximize gross sales (this final item being more common in leases containing percentage rent payments). An operating covenant may also include an obligation by the tenant to open for business correspond to the public by a certain date. If the tenant is unable to open due to government order, or it is not realistic or financially feasible for a tenant to staff, stock and open a business during these times, or a tenant is unable to continue and complete its build out by a set date, this situation may trigger liquidated or other tenant damages as well as landlord rights and remedies, including lease termination. Force Majeure: Force majeure and/or excusable delay provisions are often found in leases and typically include conditions such as adverse or extreme weather, casualty, condemnation, war, strike, acts of gods, governmental regulation, etc. As noted above, these provisions usually apply to performance obligations and have traditionally excluded payment obligations. However, it is important to review these provisions to determine if they are broad enough or do cover pandemics and to evaluate what notice, if any, is required for the provision to come into effect. Even with a force majeure provision that requires the payment of rent, some balance of the performance covenants mentioned above might be tolled if the proper notice is provided Premises which Tenant continues to a landlord. What Next? While the COVID-19 pandemic has presented landlords and retail tenants with unprecedented challenges and opportunities, it is important to consider that just because landlords can exercise some of the rights and remedies noted above, whether they should do so is another question. It is critical that the landlord-tenant relationship remain positive and strong in order for both parties to weather this pandemic and succeed in the future. While in most instances, tenants will remain legally obligated to pay rent, in light of the broad impact of COVID-19, landlords should take a number of business considerations into account prior to responding to tenant requests. To the extent possible for both parties, the recommended answer is to focus more on the business behind these landlord/tenant relationships. While understanding that the applicable lease provisions are important, it is likely more prudent to come up with a mutually satisfactory business solution that will not further strain the tenant and the landlord financially in the long term. Given how dependent this analysis is on the language of each lease and with so many novel issues raised by COVID-19 on a daily basis, landlords and tenants are advised to consult with legal counsel about their specific situations before making any final determinations about the actions they should take in the current situation, including the preparation and negotiation of any rent deferral agreements. For more information or questions about your organization's specific lease terms as they relate to COVID-19, contact the authors of this alert or another attorney in Holland & Knight's Real Estate Practice. DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the author of this alert for timely advice. Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsellease.
Appears in 1 contract
Recapture Rights. 1. If at any time during the Term of this Sublease, Subtenant desires to sub-sublease all or a tenant portion of the Premises consisting of one floor or more in a Building (the "goes dark" for Proposed Sub-Sublease Space") to an entity other than a set period of time Subtenant Affiliate as defined in Section 18F, Subtenant shall notify Sublandlord of its intention ("Subtenant's Notice"), including proposed terms and conditions for such sub-sublease if such Subtenant's Notice is given pursuant to Section 18E.3 of this Sublease.
2. If such proposed sub-sublease is for substantially the leasebalance of the term of this Sublease and Subtenant has not entered into a direct lease with Landlord to take effect upon expiration of this Sublease, the landlord may be entitled Sublandlord shall have seven (7) days after receipt of Subtenant's Notice to notify Subtenant in writing of Sublandlord's election to terminate this Sublease with respect to the lease and Proposed Sub-Sublease Space. If, however, Sublandlord fails to notify Subtenant of Sublandlord's election to terminate this Sublease, Sublandlord shall be deemed to have waived its right to recapture the premises. This right may require additional landlord notice Proposed Sub-Sublease Space at such time and payment of a fee, and might be limited by its terms during the occurrence of a force majeure event. Exclusive Use: If a lease has granted the tenant Subtenant shall have the right to lease the Proposed Sub-Sublease Space to the third party without further notice to Sublandlord. For purposes of this section, for "substantially the balance of the term of this Sublease" shall mean that less than six (6) months remain of the term of the Sublease after expiration of the sub-sublease. If Sublandlord terminates the Sublease with respect to any portion of the Premises pursuant to this section, Sublandlord and Subtenant shall enter into an "exclusive" for the use amendment to this Sublease to equitably allocate maintenance, parking, and other rights and responsibilities based upon a lease of a particular product or service, such right ("multi-tenant" building.
3. If Subtenant has not entered into a direct lease with Landlord to take effect upon expiration of this Sublease and the corresponding restriction proposed sub-sublease is not for substantially the balance of the term of this Sublease, Sublandlord shall have seven (7) days after receipt of Subtenant's Notice to notify Subtenant in writing of Sublandlord's election to lease the Proposed Sub-Sublease Space on the landlord from leasing to another tenant for any use terms stated in violation thereof) may be conditioned upon the tenantSubtenant's continuous active operations in the space as well as the tenant not being in default under the terms of the leaseNotice. If Sublandlord notifies Subtenant within such seven-day period of Sublandlord's desire to lease the Proposed Sub-Sublease Space, Subtenant and Sublandlord shall enter into a tenant lease on the proposed terms an conditions stated in Subtenant's Notice. If, however, Sublandlord fails to continuously operate, such failure may open a window notify Subtenant of time during which the landlord may agree Sublandlord's election to lease the Proposed Sub-Sublease Space within such seven-day period or, if Subtenant and Sublandlord, through no fault of Subtenant, fail to other tenants for an otherwise restricted useexecute a lease within thirty (30) days after the date of Sublandlord's notice to Subtenant, or terminate Sublandlord shall be deemed to have waived its right to lease the lease Proposed Sub-Sublease Space at such time and recapture the space of the violating tenant so that the landlord can lease to another tenant for an increased rent. Although it's not likely that many new leases are being signed at this time, tenants and landlords should be well aware of these provisions and should be well versed in the lease terms under which an exclusive may be forfeited. Co- Tenancy Rights/Remedies: Certain leases may grant tenants Subtenant shall have the right to terminate lease the lease or reduce rent if Proposed Sub-Sublease Space to the occupancy of a shopping center or retail development falls below a certain occupancy thresholdthird party on substantially the terms stated in Subtenant's Notice without further notice to Sublandlord. The rights of the tenant may include rent abatement, reduced hours or even the right to terminate. The impact the coronavirus may have on coIf Subtenant negotiates sub-tenancy rights will depend on how the occupancy thresholds are defined and what protections the landlord may have in instances of force majeure events. Rights of Renewal, Expansion, First Offer, Termination: Many leases will condition additional tenant rights such as the right to exercise an option to extend the term, or the right to change the use of the space, on the condition that the tenant is open and operating and will continue to be open for a set period of time in all of sublease terms materially more favorable (or some defined lesser part of) the premises, or not be in default under the lease. Operating Covenants and Failure to Open: Many retail leases contain a covenant requiring the tenant to continuously operate its business from the premises for the duration of the lease or for a minimum time period and during certain specific hours. This covenant may also require that, while opene.g., the tenant must effective rent is more than eight percent (8%) lower), Subtenant shall be fully staffedrequired to submit the more favorable terms to Sublandlord. Sublandlord shall have three (3) business days to reject or submit the more favorable terms, fully stocked and use best efforts to operate in a manner to maximize gross sales (this final item being more common in leases containing percentage rent payments). An operating covenant may also include an obligation by the tenant to open for business to the public by a certain date. If the tenant is unable to open due to government order, or it is not realistic or financially feasible for a tenant to staff, stock and open a business during these times, or a tenant is unable to continue and complete its build out by a set date, this situation may trigger liquidated or other tenant damages as well as landlord rights and remedies, including lease termination. Force Majeure: Force majeure and/or excusable delay provisions are often found in leases and typically include conditions such as adverse or extreme weather, casualty, condemnation, war, strike, acts of gods, governmental regulation, etc. As noted above, these provisions usually apply to performance obligations and have traditionally excluded payment obligations. However, it is important to review these provisions to determine if they are broad enough or do cover pandemics and to evaluate what notice, if any, is required for the provision to come into effect. Even with a force majeure provision that requires the payment of rent, some of the performance covenants mentioned above might be tolled if the proper notice is provided to a landlord. What Next? While the COVID-19 pandemic has presented landlords and retail tenants with unprecedented challenges and opportunities, it is important to consider that just because landlords can exercise some of the rights and remedies noted above, whether they should do so is another question. It is critical that the landlord-tenant relationship remain positive and strong in order for both parties to weather this pandemic and succeed in the future. While in most instances, tenants will remain legally obligated to pay rent, in light of the broad impact of COVID-19, landlords should take a number of business considerations into account prior to responding to tenant requests. To the extent possible for both parties, the recommended answer is to focus more on the business behind these landlord/tenant relationships. While understanding that the applicable lease provisions are important, it is likely more prudent to come up with a mutually satisfactory business solution that will not further strain the tenant and the landlord financially in the long term. Given how dependent this analysis is on the language of each lease and with so many novel issues raised by COVID-19 on a daily basis, landlords and tenants are advised to consult with legal counsel about their specific situations before making any final determinations about the actions they should take in the current situation, including the preparation and negotiation of any rent deferral agreements. For more information or questions about your organization's specific lease terms as they relate to COVID-19, contact the authors provisions of this alert section regarding acceptance or another attorney in Holland & Knight's Real Estate Practice. DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the author of this alert for timely advice. Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counselrejection then apply.
Appears in 1 contract
Sources: Sublease Agreement (Proxim Inc /De/)
Recapture Rights. If a tenant "goes dark" for a set period of time defined in the lease, the landlord may be entitled (A) Subject to terminate the lease and recapture the premises. This right may require additional landlord notice and payment of a fee, and might be limited by its terms during the occurrence of a force majeure event. Exclusive Use: If a lease has granted the tenant the right to an "exclusive" for the use of a particular product or service, such right (and the corresponding restriction on the landlord from leasing to another tenant for any use in violation thereof) may be conditioned upon the tenant's continuous active operations in the space as well as the tenant not being in default under the terms of this Section 12.10, if (x) Tenant proposes to sublease the lease. If a tenant fails Premises or (y) Tenant proposes to continuously operateassign Tenant's interest in this Lease pursuant to Section 12.8 hereof, such failure may open a window of time during which the landlord may agree to lease to other tenants for an otherwise restricted use, or terminate the lease and recapture the space of the violating tenant so that the landlord can lease to another tenant for an increased rent. Although it's not likely that many new leases are being signed at this time, tenants and landlords should be well aware of these provisions and should be well versed in the lease terms under which an exclusive may be forfeited. Co- Tenancy Rights/Remedies: Certain leases may grant tenants then Landlord shall have the right to terminate this Lease (the lease or reduce rent aforesaid option to terminate this Lease being referred to herein as a "Recapture Termination"). In addition, subject to the terms of this Section 12.10, if Tenant proposes to sublease the occupancy of a shopping center or retail development falls below a certain occupancy threshold. The rights of the tenant may include rent abatementPremises, reduced hours or even Landlord shall also have the right to terminatesublease the Premises from Tenant on the terms set forth in Section 12.10(C) hereof (Landlord's aforesaid option to sublease the Premises or the applicable portion thereof from Tenant being referred to herein as a "Recapture Sublease"). The impact the coronavirus may Landlord shall have on co-tenancy rights will depend on how the occupancy thresholds are defined and what protections the landlord may have in instances of force majeure events. Rights of Renewal, Expansion, First Offer, Termination: Many leases will condition additional tenant rights such as the right to exercise elect a Recapture Termination or a Recapture Sublease (as the case may be) only by giving notice thereof to Tenant on or prior to the ninetieth (90th) day after the date when Tenant gives to Landlord the Sublease Statement or the Assignment Statement (as the case may be).
(B) Landlord shall specify in any such notice pursuant to which Landlord elects a Recapture Termination the date when this Lease shall terminate (which shall be no sooner than sixty (60) days, and no more then one hundred eighty (180) days, after the date when Landlord gives such notice to Tenant). If Landlord exercises such right to terminate this Lease, then this Lease, shall expire on the aforesaid termination date designated by Landlord, and accordingly, on or prior to such date, Tenant shall vacate the Premises and deliver possession thereof to Landlord in accordance with the terms hereof that govern Tenant's obligations in respect thereof at the expiration or earlier termination of the Term.
(C) Subject to the terms of this Section 12.10(C), if Landlord elects a Recapture Sublease pursuant to this Section 12.10, then Tenant shall demise and sublease to Landlord (or Landlord's designee), and Landlord (or Landlord's designee) shall hire and take from Tenant, the Premises or the applicable portion thereof that Tenant proposes to sublease as aforesaid, and for the term set forth in the Sublease Statement, at a rental equal to the lesser of (i) the rental set forth in the Sublease Statement, and (ii) the Rental due hereunder, and otherwise on the same terms set forth in this Lease. If Tenant's proposal to sublease as set forth in the Sublease Statement contemplated that Tenant would provide the proposed subtenant with a work allowance (or work performed by or on behalf of Tenant in lieu thereof or in addition thereto), a free rent period, or other similar inducements or concessions, then Landlord shall have the right to either (x) reduce the rental due from Landlord or Landlord's designee to Tenant by reason of the Recapture Sublease by an option equitable amount to extend reflect that the termRecapture Sublease does not require Tenant to provide such inducements or concessions to Landlord, or (y) require Tenant to provide such inducements or concessions to Landlord or Landlord's designee under the Recapture Sublease. Landlord shall have the right to further sublease the Premises (in whole or in part) or assign Landlord's interest under such sublease, in each case without Tenant's approval. Landlord shall have no obligation to make any payments to Tenant on account of any profit derived by Landlord from any such sublease or assignment. Landlord shall have the right to perform or to permit to be performed alterations in the Premises, without Tenant's approval (it being agreed, however, that Tenant shall have no obligation, upon the expiration or earlier termination of the Term, to remove any such alterations performed in the Premises). Landlord shall have no obligation to remove any such alterations upon the expiration or earlier termination of the Recapture Sublease. Landlord (or Landlord's subtenants or assignees) shall have the right to use the Premises (or the applicable portion thereof) under a Recapture Sublease for any lawful purpose. If Landlord elects a Recapture Sublease, then Tenant shall execute and deliver to Landlord (or Landlord's designee), and Landlord shall execute and deliver (or shall cause Landlord's designee to execute and deliver) to Tenant, a sublease prepared by or on behalf of Landlord providing therefor, in accordance with the provisions of this Section 12.10(C), as promptly as reasonably practicable after Landlord elects such Recapture Sublease. Landlord acknowledges that a default by Landlord (or Landlord's designee) under a Recapture Sublease, or the right to change the use exercise by Landlord or Landlord's designee of the spaceits rights under a Recapture Sublease, on the condition that the tenant is open and operating and will continue to be open for shall not constitute a set period of time in all of (or some defined lesser part of) the premises, or not be in default under the lease. Operating Covenants and Failure to Open: Many retail leases contain a covenant requiring the tenant to continuously operate its business from the premises for the duration of the lease or for a minimum time period and during certain specific hours. This covenant may also require that, while open, the tenant must be fully staffed, fully stocked and use best efforts to operate in a manner to maximize gross sales (this final item being more common in leases containing percentage rent payments). An operating covenant may also include an obligation by the tenant to open for business to the public by a certain date. If the tenant is unable to open due to government order, or it is not realistic or financially feasible for a tenant to staff, stock and open a business during these times, or a tenant is unable to continue and complete its build out by a set date, this situation may trigger liquidated or other tenant damages as well as landlord rights and remedies, including lease termination. Force Majeure: Force majeure and/or excusable delay provisions are often found in leases and typically include conditions such as adverse or extreme weather, casualty, condemnation, war, strike, acts of gods, governmental regulation, etc. As noted above, these provisions usually apply to performance obligations and have traditionally excluded payment obligations. However, it is important to review these provisions to determine if they are broad enough or do cover pandemics and to evaluate what notice, if any, is required for the provision to come into effect. Even with a force majeure provision that requires the payment of rent, some of the performance covenants mentioned above might be tolled if the proper notice is provided to a landlord. What Next? While the COVID-19 pandemic has presented landlords and retail tenants with unprecedented challenges and opportunities, it is important to consider that just because landlords can exercise some of the rights and remedies noted above, whether they should do so is another question. It is critical that the landlord-tenant relationship remain positive and strong in order for both parties to weather this pandemic and succeed in the future. While in most instances, tenants will remain legally obligated to pay rent, in light of the broad impact of COVID-19, landlords should take a number of business considerations into account prior to responding to tenant requests. To the extent possible for both parties, the recommended answer is to focus more on the business behind these landlord/tenant relationships. While understanding that the applicable lease provisions are important, it is likely more prudent to come up with a mutually satisfactory business solution that will not further strain the tenant and the landlord financially in the long term. Given how dependent this analysis is on the language of each lease and with so many novel issues raised by COVID-19 on a daily basis, landlords and tenants are advised to consult with legal counsel about their specific situations before making any final determinations about the actions they should take in the current situation, including the preparation and negotiation of any rent deferral agreements. For more information or questions about your organization's specific lease terms as they relate to COVID-19, contact the authors of this alert or another attorney in Holland & Knight's Real Estate Practice. DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the author of this alert for timely advice. Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counselTenant hereunder.
Appears in 1 contract
Recapture Rights. (1) If at any time during the Term of this Sublease, Subtenant desires to sub-sublease all or a tenant "goes dark" portion of the Premises (the “Proposed Sub-Sublease Space”), Subtenant shall notify Sublandlord of its intention (“Subtenant’s Notice”), including proposed terms and conditions for a set period such sub-sublease if such Subtenant’s Notice is given pursuant to Section 18.E.3 of time defined this Sublease.
(2) If such proposed sub-sublease is for substantially the balance of the term of this Sublease, Sublandlord shall have seven (7) days after receipt of Subtenant’s Notice to notify Subtenant in the lease, the landlord may be entitled writing of Sublandlord’s election to terminate this Sublease with respect to the lease and Proposed Sub-Sublease Space. If, however, Sublandlord fails to notify Subtenant of Sublandlord’s election to terminate this Sublease, Sublandlord shall be deemed to have waived its right to recapture the premises. This right may require additional landlord notice Proposed Sub-Sublease Space at such time and payment of a fee, and might be limited by its terms during the occurrence of a force majeure event. Exclusive Use: If a lease has granted the tenant Subtenant shall have the right to an "exclusive" lease the Proposed Sub-Sublease Space to the third party without further notice to Sublandlord. For purposes of this provision, for “substantially the use balance of a particular product or servicethe term of this Sublease” shall mean that less than six (6) months remain of the term of the Sublease.
(3) If the Proposed Sub-sublease Space is not subject to “recapture” under 19.E.2, such right Sublandlord shall have seven (and 7) days after receipt of Subtenant’s Notice to notify Subtenant in writing of Sublandlord’s election to lease the corresponding restriction Proposed Sub-Sublease Space on the landlord from leasing to another tenant for any use terms stated in violation thereof) may be conditioned upon the tenant's continuous active operations in the space as well as the tenant not being in default under the terms of the leaseSubtenant’s Notice. If Sublandlord notifies Subtenant within such seven-day period of Sublandlord’s desire to lease the Proposed Sub-Sublease Space, Subtenant and Sublandlord shall enter into a tenant lease on the proposed terms an conditions stated in Subtenant’s Notice. If, however, Sublandlord fails to continuously operate, such failure may open a window notify Subtenant of time during which the landlord may agree Sublandlord’s election to lease the Proposed Sub-Sublease Space within such seven-day period or, if Subtenant and Sublandlord, through no fault of Subtenant, fail to other tenants for an otherwise restricted useexecute a lease within thirty (30) days after the date of Sublandlord’s notice to Subtenant, or terminate Sublandlord shall be deemed to have waived its right to lease the lease Proposed Sub-Sublease Space at such time and recapture the space of the violating tenant so that the landlord can lease to another tenant for an increased rent. Although it's not likely that many new leases are being signed at this time, tenants and landlords should be well aware of these provisions and should be well versed in the lease terms under which an exclusive may be forfeited. Co- Tenancy Rights/Remedies: Certain leases may grant tenants Subtenant shall have the right to terminate lease the lease or reduce rent if the occupancy of a shopping center or retail development falls below a certain occupancy threshold. The rights of the tenant may include rent abatement, reduced hours or even the right to terminate. The impact the coronavirus may have on coProposed Sub-tenancy rights will depend on how the occupancy thresholds are defined and what protections the landlord may have in instances of force majeure events. Rights of Renewal, Expansion, First Offer, Termination: Many leases will condition additional tenant rights such as the right to exercise an option to extend the term, or the right to change the use of the space, on the condition that the tenant is open and operating and will continue to be open for a set period of time in all of (or some defined lesser part of) the premises, or not be in default under the lease. Operating Covenants and Failure to Open: Many retail leases contain a covenant requiring the tenant to continuously operate its business from the premises for the duration of the lease or for a minimum time period and during certain specific hours. This covenant may also require that, while open, the tenant must be fully staffed, fully stocked and use best efforts to operate in a manner to maximize gross sales (this final item being more common in leases containing percentage rent payments). An operating covenant may also include an obligation by the tenant to open for business Sublease Space to the public by a certain date. If third party on substantially the tenant is unable terms stated in Subtenant’s Notice without further notice to open due to government order, or it is not realistic or financially feasible for a tenant to staff, stock and open a business during these times, or a tenant is unable to continue and complete its build out by a set date, this situation may trigger liquidated or other tenant damages as well as landlord rights and remedies, including lease termination. Force Majeure: Force majeure and/or excusable delay provisions are often found in leases and typically include conditions such as adverse or extreme weather, casualty, condemnation, war, strike, acts of gods, governmental regulation, etc. As noted above, these provisions usually apply to performance obligations and have traditionally excluded payment obligations. However, it is important to review these provisions to determine if they are broad enough or do cover pandemics and to evaluate what notice, if any, is required for the provision to come into effect. Even with a force majeure provision that requires the payment of rent, some of the performance covenants mentioned above might be tolled if the proper notice is provided to a landlord. What Next? While the COVID-19 pandemic has presented landlords and retail tenants with unprecedented challenges and opportunities, it is important to consider that just because landlords can exercise some of the rights and remedies noted above, whether they should do so is another question. It is critical that the landlord-tenant relationship remain positive and strong in order for both parties to weather this pandemic and succeed in the future. While in most instances, tenants will remain legally obligated to pay rent, in light of the broad impact of COVID-19, landlords should take a number of business considerations into account prior to responding to tenant requests. To the extent possible for both parties, the recommended answer is to focus more on the business behind these landlord/tenant relationships. While understanding that the applicable lease provisions are important, it is likely more prudent to come up with a mutually satisfactory business solution that will not further strain the tenant and the landlord financially in the long term. Given how dependent this analysis is on the language of each lease and with so many novel issues raised by COVID-19 on a daily basis, landlords and tenants are advised to consult with legal counsel about their specific situations before making any final determinations about the actions they should take in the current situation, including the preparation and negotiation of any rent deferral agreements. For more information or questions about your organization's specific lease terms as they relate to COVID-19, contact the authors of this alert or another attorney in Holland & Knight's Real Estate Practice. DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the author of this alert for timely advice. Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counselSublandlord.
Appears in 1 contract
Sources: Sublease Agreement (ShoreTel Inc)
Recapture Rights. If a tenant "goes dark" for a set period (A) Subject to the terms of time defined in this Section 12.10, if (x) Tenant proposes to sublease the leasePremises pursuant to Section 12.6 hereof, the landlord may be entitled or (y) Tenant proposes to terminate the lease and recapture the premises. This right may require additional landlord notice and payment of a feeassign this Lease pursuant to Section 12.8 hereof, and might be limited by its terms during the occurrence of a force majeure event. Exclusive Use: If a lease has granted the tenant then Landlord shall have the right to an either (i) terminate this Lease (the option described in this clause (i) being referred to herein as a "exclusive" Recapture Termination"), or (ii) (A) sublease the Premises from Tenant on the terms and subject to the conditions set forth in the Sublease Statement (the option described in this clause (ii)(A) being referred to herein as a "Recapture Sublease"), or (B) take Tenant's interest in this Lease by assignment on the terms and subject to the conditions set forth in the Assignment Statement (the option described in this clause (ii)(B) being referred to herein as a "Recapture Assignment"), as the case may be. Landlord shall have the right to elect a Recapture Termination, or a Recapture Sublease or a Recapture Assignment (as the case may be), only by giving notice thereof to Tenant on or prior to the fifteenth (15th) day after the date when Tenant gives to Landlord the Sublease Statement or the Assignment Statement (as the case may be).
(B) Landlord shall specify in any such notice pursuant to which Landlord elects a Recapture Termination the date when this Lease shall terminate (which shall be no sooner than sixty (60) days, and no more then one hundred eighty (180) days, after the date when Landlord gives such notice to Tenant). If Landlord exercises such right to terminate this Lease, then this Lease shall expire on the aforesaid termination date designated by Landlord, and accordingly, on or prior to such date, Tenant shall vacate the Premises and deliver possession thereof to Landlord in accordance with the terms hereof that govern Tenant's obligation in respect thereof at the expiration or earlier termination of the Tenn.
(C) Subject to the terms of this Section 11.10(C), if Landlord elects a Recapture Sublease pursuant to this Section 12.10, then Tenant shall demise and sublease to Landlord (or Landlord's designee), and Landlord (or Landlord's designee) shall hire and take from Tenant, the Premises, for the use of a particular product or service, such right (rental and for the corresponding restriction term set forth in the Sublease Statement and otherwise on the landlord same terms set forth in this Lease. If Tenant's proposal to sublease as set forth in the Sublease Statement contemplated that Tenant would provide the proposed subtenant with a work allowance (or work performed by or on behalf of Tenant in lieu thereof or in addition thereto), a free rent period, or other similar inducements or concessions, then Landlord shall have the right to either (x) reduce the rental due from leasing Landlord or Landlord's designee to another tenant Tenant by reason of the Recapture Sublease by an equitable amount to reflect that the Recapture Sublease does not require Tenant to provide such inducements or concessions to Landlord, or (y) require Tenant to provide such inducements or concessions to Landlord or Landlord's designee under the Recapture Sublease. Landlord shall have the right to further sublease the Premises (in whole or in part) or assign Landlord's interest under such sublease, in each case without Tenant's approval. Landlord shall have no obligation to make any payments to Tenant on account of any profit derived by Landlord from any such sublease or assignment. Landlord shall have the right to perform or to permit to be performed alterations in the Premises, without Tenant's approval (it being agreed, however, that Tenant shall have no obligation, upon the expiration or earlier termination of the Term, to remove any such alterations performed in the Premises). Landlord shall have no obligation to remove any such alterations upon the expiration or earlier termination of the Recapture Sublease. Landlord (or Landlord's subtenants or assignees) shall have the right to use the Premises under a Recapture Sublease for any use lawful purpose. If Landlord elects a Recapture Sublease, then Tenant shall execute and deliver to Landlord (or Landlord's designee), and Landlord shall execute and deliver (or shall cause Landlord's designee to execute and deliver) to Tenant, a sublease prepared by or on behalf of Landlord providing therefor, in violation thereofaccordance with the provisions of this Section 12.10(C), as promptly as reasonably practicable after Landlord elects such Recapture Sublease. Landlord acknowledges that a default by Landlord (or Landlord's designee) may be conditioned upon under a Recapture Sublease, or the exercise by Landlord or Landlord's designee of its rights under a Recapture Sublease, shall not constitute a default by Tenant hereunder.
(D) Subject to the terms of this Section 12.10(D), if Landlord elects a Recapture Assignment, then Tenant shall assign to Landlord or Landlord's designee, promptly after the date when Landlord elects the Recapture Assignment, the interest of the tenant hereunder, free and clear of all liens and encumbrances, pursuant to an instrument prepared by Landlord that is in accordance with the provisions of this Section 12.10(D). Landlord and Tenant acknowledge that Tenant's assignment of the tenant's continuous active operations in interest under this Lease to Landlord or Landlord's designee shall not constitute a merger of Landlord's estate as landlord hereunder with the space as well as the tenant not being in default under the terms of the lease. If a tenant fails to continuously operate, such failure may open a window of time during which the landlord may agree to lease to other tenants for an otherwise restricted use, or terminate the lease and recapture the space of the violating tenant so that the landlord can lease to another tenant for an increased rent. Although it's not likely that many new leases are being signed at this time, tenants and landlords should be well aware of these provisions and should be well versed in the lease terms under which an exclusive may be forfeited. Co- Tenancy Rights/Remedies: Certain leases may grant tenants the right to terminate the lease or reduce rent if the occupancy of a shopping center or retail development falls below a certain occupancy threshold. The rights estate of the tenant may include rent abatement, reduced hours hereunder. Simultaneously with the consummation of such assignment Landlord shall pay (or even the right to terminate. The impact the coronavirus may have on co-tenancy rights will depend on how the occupancy thresholds are defined and what protections the landlord may have in instances of force majeure events. Rights of Renewal, Expansion, First Offer, Termination: Many leases will condition additional tenant rights such as the right to exercise an option to extend the term, or the right to change the use of the space, on the condition that the tenant is open and operating and will continue shall cause to be open for a set period of time in all of (or some defined lesser part ofpaid) the premises, or not be in default under the lease. Operating Covenants and Failure to Open: Many retail leases contain a covenant requiring the tenant to continuously operate its business from the premises for the duration of the lease or for a minimum time period and during certain specific hours. This covenant may also require that, while open, the tenant must be fully staffed, fully stocked and use best efforts to operate in a manner to maximize gross sales (this final item being more common in leases containing percentage rent payments). An operating covenant may also include Tenant an obligation by the tenant to open for business amount equal to the public by a certain date. If the tenant is unable to open due to government order, or it is not realistic or financially feasible for a tenant to staff, stock and open a business during these times, or a tenant is unable to continue and complete its build out by a set date, this situation may trigger liquidated or other tenant damages as well as landlord rights and remedies, including lease termination. Force Majeure: Force majeure and/or excusable delay provisions are often found in leases and typically include conditions such as adverse or extreme weather, casualty, condemnation, war, strike, acts of gods, governmental regulation, etc. As noted above, these provisions usually apply to performance obligations and have traditionally excluded payment obligations. However, it is important to review these provisions to determine if they are broad enough or do cover pandemics and to evaluate what notice, net consideration (if any, is required for the provision to come into effect. Even with a force majeure provision ) that requires the payment of rent, some of the performance covenants mentioned above might be tolled if the proper notice is provided to a landlord. What Next? While the COVID-19 pandemic has presented landlords and retail tenants with unprecedented challenges and opportunities, it is important to consider that just because landlords can exercise some of the rights and remedies noted above, whether they should do so is another question. It is critical that the landlord-tenant relationship remain positive and strong in order for both parties to weather this pandemic and succeed in the future. While in most instances, tenants will remain legally obligated to pay rent, in light of the broad impact of COVID-19, landlords should take a number of business considerations into account prior to responding to tenant requests. To the extent possible for both parties, the recommended answer is to focus more on the business behind these landlord/tenant relationships. While understanding that the applicable lease provisions are important, it is likely more prudent to come up with a mutually satisfactory business solution that will not further strain the tenant and the landlord financially in the long term. Given how dependent this analysis is on the language of each lease and with so many novel issues raised by COVID-19 on a daily basis, landlords and tenants are advised to consult with legal counsel about their specific situations before making any final determinations about the actions they should take in the current situation, including the preparation and negotiation of any rent deferral agreements. For more information or questions about your organization's specific lease terms as they relate to COVID-19, contact the authors of this alert or another attorney in Holland & Knight's Real Estate Practice. DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the author of this alert for timely advice. Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you Tenant would have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.received from the
Appears in 1 contract
Sources: Lease Agreement (Enote Com Inc)
Recapture Rights. If Landlord shall have the option, to be exercised by Notice to Tenant prior to expiration of the Review Period, to (a) terminate this Lease effective as of the commencement date of the proposed Transfer (provided, that if the proposed Transfer is a tenant "goes dark" for a set period sublease, such termination shall be limited to the area of time defined the Premises proposed to be sublet); or (b) sublease or take an assignment, as the case may be, from Tenant of the interest, or any portion thereof, in this Lease or the Premises that Tenant proposes to Transfer, on the same terms and conditions as stated in the leaseproposed Transfer agreement, and no such subleasing or assignment to Landlord shall work a merger. If Landlord makes an election described under clause (a) or (b) above (a “Recapture Right”), then Landlord shall have the right (but not the obligation) to negotiate directly with the proposed Transferee and to enter into any agreement with such party on such terms as may be acceptable to Landlord in its sole discretion, and Tenant waives any and all Claims against Landlord related thereto. Notwithstanding anything in the foregoing to the contrary, Tenant may, at any time prior to the commencement of Tenant’s marketing efforts for any sublease or assignment transaction, provide Notice to Landlord of the type of assignment or subletting transaction that Tenant intends to enter into with a prospective Transferee (including, without limitation term, amount of space and genera] rental rates) (collectively, the landlord may be entitled to terminate the lease and recapture the premises. This right may require additional landlord notice and payment of a fee“Transfer Parameters”), and might request that Landlord, at that time, commit to whether Landlord intends to exercise its Recapture Right with respect to such a transaction or not. Within twenty (20) days from the date of Tenant’s Notice of the Transfer Parameters, Landlord will indicate in writing to Tenant whether or not Landlord will exercise its Recapture Right with respect to all or any portion of the Premises subject to Tenant’s Notice. If Landlord elects to exercise its Recapture Right, Landlord’s election shall be deemed final and binding on Tenant unless Tenant, within five (5) business days after Landlord’s Notice, rescinds its original Notice to Landlord of Tenant’s intent to enter into an assignment or subletting transaction in accordance with the Transfer Parameters. If Landlord does not elect to exercise its Recapture Right within said twenty (20) day period, Landlord shall be deemed to have waived its right to elect the Recapture Right as to any assignment or subletting transaction satisfying the Transfer Parameters and for which Tenant, during the six (6) month period after Landlord’s election or deemed election to not exercise its Recapture Right in accordance with this Section 13.5, seeks Landlord’s prior consent under Section 13.3, and Landlord’s rights with respect to any such proposed transaction shall be limited by its terms during the occurrence of a force majeure event. Exclusive Use: If a lease has granted the tenant the right to an "exclusive" for the use of a particular product or serviceLandlord’s rights under this Article 13.3, such right (and the corresponding restriction on the landlord from leasing without giving effect to another tenant for any use in violation thereof) may be conditioned upon the tenant's continuous active operations in the space as well as the tenant not being in default under the terms of the lease. If a tenant fails to continuously operate, such failure may open a window of time during which the landlord may agree to lease to other tenants for an otherwise restricted use, or terminate the lease and recapture the space of the violating tenant so that the landlord can lease to another tenant for an increased rent. Although it's not likely that many new leases are being signed at this time, tenants and landlords should be well aware of these provisions and should be well versed in the lease terms under which an exclusive may be forfeited. Co- Tenancy Rights/Remedies: Certain leases may grant tenants the right to terminate the lease or reduce rent if the occupancy of a shopping center or retail development falls below a certain occupancy thresholdSection 13.5. The rights granted Tenant hereunder to send a Notice to Landlord with proposed Transfer Parameters and to be able to enter into a Transfer without triggering Landlord’s Recapture Right are personal to the named Tenant under this Lease and any Transferee under a Permitted Transfer, and shall be of no further effect following any other Transfer by any of the tenant may include rent abatement, reduced hours or even the right to terminate. The impact the coronavirus may have on co-tenancy rights will depend on how the occupancy thresholds are defined and what protections the landlord may have in instances of force majeure events. Rights of Renewal, Expansion, First Offer, Termination: Many leases will condition additional tenant rights such as the right to exercise an option to extend the term, or the right to change the use of the space, on the condition that the tenant is open and operating and will continue to be open for a set period of time in all of (or some defined lesser part of) the premises, or not be in default under the lease. Operating Covenants and Failure to Open: Many retail leases contain a covenant requiring the tenant to continuously operate its business from the premises for the duration of the lease or for a minimum time period and during certain specific hours. This covenant may also require that, while open, the tenant must be fully staffed, fully stocked and use best efforts to operate in a manner to maximize gross sales (this final item being more common in leases containing percentage rent payments). An operating covenant may also include an obligation by the tenant to open for business to the public by a certain date. If the tenant is unable to open due to government order, or it is not realistic or financially feasible for a tenant to staff, stock and open a business during these times, or a tenant is unable to continue and complete its build out by a set date, this situation may trigger liquidated or other tenant damages as well as landlord rights and remedies, including lease termination. Force Majeure: Force majeure and/or excusable delay provisions are often found in leases and typically include conditions such as adverse or extreme weather, casualty, condemnation, war, strike, acts of gods, governmental regulation, etc. As noted above, these provisions usually apply to performance obligations and have traditionally excluded payment obligations. However, it is important to review these provisions to determine if they are broad enough or do cover pandemics and to evaluate what notice, if any, is required for the provision to come into effect. Even with a force majeure provision that requires the payment of rent, some of the performance covenants mentioned above might be tolled if the proper notice is provided to a landlord. What Next? While the COVID-19 pandemic has presented landlords and retail tenants with unprecedented challenges and opportunities, it is important to consider that just because landlords can exercise some of the rights and remedies noted above, whether they should do so is another question. It is critical that the landlord-tenant relationship remain positive and strong in order for both parties to weather this pandemic and succeed in the future. While in most instances, tenants will remain legally obligated to pay rent, in light of the broad impact of COVID-19, landlords should take a number of business considerations into account prior to responding to tenant requests. To the extent possible for both foregoing Tenant parties, the recommended answer is to focus more on the business behind these landlord/tenant relationships. While understanding that the applicable lease provisions are important, it is likely more prudent to come up with a mutually satisfactory business solution that will not further strain the tenant and the landlord financially in the long term. Given how dependent this analysis is on the language of each lease and with so many novel issues raised by COVID-19 on a daily basis, landlords and tenants are advised to consult with legal counsel about their specific situations before making any final determinations about the actions they should take in the current situation, including the preparation and negotiation of any rent deferral agreements. For more information or questions about your organization's specific lease terms as they relate to COVID-19, contact the authors of this alert or another attorney in Holland & Knight's Real Estate Practice. DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the author of this alert for timely advice. Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.
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Recapture Rights. If a tenant "goes dark" Tenant proposes to assign Tenant’s interest in this Lease or sublease more than fifty percent (50%) of the Premises for a set period at least one-half of time defined the remainder of the Lease Term (excluding any unexercised Extended Terms) other than in the leaseconnection with an Affiliate Transfer, the landlord Landlord, at Landlord’s option, may be entitled elect to terminate the lease and recapture the premisesPremises by delivering written notice thereof to Tenant (a “Recapture Notice”) within thirty (30) days after Landlord’s receipt of Tenant’s request for Landlord’s consent to such assignment or sublease, following which the Lease Term shall terminate on the date specified within such Recapture Notice (which date shall be within sixty (60) days after the date of such Recapture Notice), unless Tenant shall deliver to Landlord written notice withdrawing its request for consent to assign this Lease or enter into any such sublease within thirty (30) days after the date of the Recapture Notice. This right may require additional landlord notice If the Premises is recaptured by Landlord pursuant to this Section 19(d), Landlord and payment of Tenant shall promptly execute a fee, and might be limited by its terms during the occurrence of a force majeure event. Exclusive Use: If a lease has granted the tenant the right to an "exclusive" termination agreement for the use purpose of a particular product or service, setting forth the termination date and prorating the Base Rent and other charges to such right (and the corresponding restriction on the landlord from leasing to another tenant for any use in violation thereof) may be conditioned upon the tenant's continuous active operations in the space as well as the tenant not being in default under the terms of the lease. If a tenant fails to continuously operate, such failure may open a window of time during which the landlord may agree to lease to other tenants for an otherwise restricted use, or terminate the lease and recapture the space of the violating tenant so that the landlord can lease to another tenant for an increased rent. Although it's not likely that many new leases are being signed at this time, tenants and landlords should be well aware of these provisions and should be well versed in the lease terms under which an exclusive may be forfeited. Co- Tenancy Rights/Remedies: Certain leases may grant tenants the right to terminate the lease or reduce rent if the occupancy of a shopping center or retail development falls below a certain occupancy threshold. The rights of the tenant may include rent abatement, reduced hours or even the right to terminate. The impact the coronavirus may have on co-tenancy rights will depend on how the occupancy thresholds are defined and what protections the landlord may have in instances of force majeure events. Rights of Renewal, Expansion, First Offer, Termination: Many leases will condition additional tenant rights such as the right to exercise an option to extend the term, or the right to change the use of the space, on the condition that the tenant is open and operating and will continue to be open for a set period of time in all of (or some defined lesser part of) the premises, or not be in default under the lease. Operating Covenants and Failure to Open: Many retail leases contain a covenant requiring the tenant to continuously operate its business from the premises for the duration of the lease or for a minimum time period and during certain specific hours. This covenant may also require that, while open, the tenant must be fully staffed, fully stocked and use best efforts to operate in a manner to maximize gross sales (this final item being more common in leases containing percentage rent payments). An operating covenant may also include an obligation by the tenant to open for business to the public by a certain date. If the tenant is unable Landlord does not elect to open due to government order, or it is not realistic or financially feasible for a tenant to staff, stock and open a business during these times, or a tenant is unable to continue and complete its build out by a recapture as set date, this situation may trigger liquidated or other tenant damages as well as landlord rights and remedies, including lease termination. Force Majeure: Force majeure and/or excusable delay provisions are often found in leases and typically include conditions such as adverse or extreme weather, casualty, condemnation, war, strike, acts of gods, governmental regulation, etc. As noted forth above, these provisions usually apply Tenant may enter into a valid assignment or sublease with respect to performance obligations the Premises, provided that Landlord consents to the same pursuant to this Section 19; provided, further, that (i) such assignment or sublease is executed within ninety (90) days after Landlord has given Landlord’s consent, (ii) Tenant pays all amounts then owed to Landlord under this Lease, and have traditionally excluded payment obligations. However, it is important to review these provisions to determine if they are broad enough or do cover pandemics and to evaluate what notice, if any, is required for the provision to come into effect. Even with a force majeure provision that requires the payment (iii) no Event of rent, some Default shall be outstanding as of the performance covenants mentioned above might be tolled if the proper notice is provided to a landlord. What Next? While the COVID-19 pandemic has presented landlords and retail tenants with unprecedented challenges and opportunities, it is important to consider that just because landlords can exercise some effective date of the rights and remedies noted above, whether they should do so is another question. It is critical that the landlord-tenant relationship remain positive and strong in order for both parties to weather this pandemic and succeed in the future. While in most instances, tenants will remain legally obligated to pay rent, in light of the broad impact of COVID-19, landlords should take a number of business considerations into account prior to responding to tenant requests. To the extent possible for both parties, the recommended answer is to focus more on the business behind these landlord/tenant relationships. While understanding that the applicable lease provisions are important, it is likely more prudent to come up with a mutually satisfactory business solution that will not further strain the tenant and the landlord financially in the long term. Given how dependent this analysis is on the language of each lease and with so many novel issues raised by COVID-19 on a daily basis, landlords and tenants are advised to consult with legal counsel about their specific situations before making any final determinations about the actions they should take in the current situation, including the preparation and negotiation of any rent deferral agreements. For more information assignment or questions about your organization's specific lease terms as they relate to COVID-19, contact the authors of this alert or another attorney in Holland & Knight's Real Estate Practice. DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the author of this alert for timely advice. Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counselsublease.
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