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Everyone Benefits From Collaborative Drafting of Exclusive Use Provisions in Commercial Leases

Everyone Benefits From Collaborative Drafting of Exclusive Use Provisions in Commercial Leases

Landlords and tenants in commercial lease negotiations usually see themselves as adversaries. However, when you stop and think about it, both parties really have the same ultimate goal; that is that the tenant operate a successful business on landlord’s property. Sure, each provision of each lease is scrutinized, analyzed and dissected by both parties to assure that neither party gets too much of an upper hand on the other once the lease is signed. But, at the end of the day, a multi-year relationship is created and both parties want and need the tenant to succeed.

Permitted/restricted use and exclusive use provisions in retail and office leases are often hard fought, but should they be? These provisions clearly should be very well thought out and well drafted. Ultimately, however, the aim of these provisions is to assure the tenant’s success as well as the success of all the tenants in the project which in turn helps the landlord and the project succeed. The success is symbiotic and these use clauses help everyone to achieve this prosperity, but only if each party to each lease is careful when crafting their specific provisions.

The landlord will have to drive the bus because only the landlord will have knowledge as to all of the exclusives that must be protected within a given property. And with the list of existing exclusives as a starting point, the parties can craft the prohibited and permitted uses provisions and accommodate the tenant’s own needs for exclusive uses. Proper remedies should be included in the lease to protect tenant’s exclusive rights and, from landlord’s perspective, tenant should have no right to change its use without landlord’s consent. Upon any permitted assignment of the lease, the exclusive should terminate, giving landlord the ability to analyze new conditions on the property.

Attorneys might not be used to collaborative drafting. But in the case of use and exclusive use provisions in commercial leases, landlords and tenants might realize that they have common interests.


David Blattner

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