{"id":1357,"date":"2012-04-11T13:00:00","date_gmt":"2012-04-11T13:00:00","guid":{"rendered":"https:\/\/www.sherin.com\/real-estate\/2012\/04\/11\/6-tips-for-retail-tenants-traps-preventing-lease-transfers\/"},"modified":"2023-11-08T18:37:45","modified_gmt":"2023-11-08T18:37:45","slug":"6-tips-for-retail-tenants-traps-preventing-lease-transfers","status":"publish","type":"post","link":"https:\/\/www.sherin.com\/real-estate\/2012\/04\/11\/6-tips-for-retail-tenants-traps-preventing-lease-transfers\/","title":{"rendered":"6 Tips for Retail Tenants: Traps Preventing Lease Transfers"},"content":{"rendered":"<p>Retail tenants entering into long term leases should be aware that tenants\u2019 rights to assign or sublet may prove illusory if other lease provisions effectively prevent transferring the lease to a third party.\u00a0 Here are several lease provisions that should be analyzed to ensure that a prospective transferee has the flexibility to operate its business and be willing to assume the lease:<\/p>\n<ul>\n<li><b>Use.<\/b>\u00a0 The use clause must be broad enough to allow transfers for a different retail use.\u00a0 If the use clause states that the premises may only be used for the original tenant\u2019s particular use \u201cand for no other use or purpose,\u201d the original tenant be precluded from assigning or subletting to a \u00a0different type of business.\u00a0 Most favorable for the tenant would be for the lease to provide that the premises may be used for the initial use and \u201c any other lawful use\u201d or \u201cany other lawful retail or commercial use\u201d that does not conflict with any exclusive use then in effect granted to another tenant in the Shopping Center.\u00a0 A compromise would require landlord\u2019s reasonable consent to a change in use.<\/li>\n<li><b>Trade Name.<\/b>\u00a0 Tenants should be wary of agreeing to operate under a specific trade name.\u00a0 If tenant agrees to conduct business under a specific trade name, it should negotiate the right to change the trade name without landlord\u2019s consent.\u00a0 Alternatively, the lease may provide that changes to the name may be approved by landlord, such approval not to be unreasonably withheld, conditioned, or delayed.<\/li>\n<li><b>Alterations.<\/b>\u00a0 If the lease requires landlord\u2019s consent in its sole discretion for all alterations, a transferee may not be able to redesign\/refixture the store.\u00a0 Interior, non-structural alterations after the initial build-out should be allowed without the necessity of landlord\u2019s consent.\u00a0 Material alterations (such as exterior alterations, or those that affect the structure, or materially affect building systems) will usually require the landlord\u2019s consent, but such consent should not be unreasonably withheld, conditioned, or delayed.<\/li>\n<li><b>Signage.<\/b>\u00a0 Transferees will need the right to change exterior signage.\u00a0 If the lease requires landlord\u2019s consent in its sole and absolute discretion for changes in exterior signage, a new tenant may be prohibited from erecting its signage.\u00a0 The lease should provide that landlord\u2019s consent to changes in exterior signage shall not be unreasonably withheld, conditioned, or delayed.\u00a0 Furthermore, tenants should seek to limit landlord\u2019s approval rights to proposed changes to tenant\u2019s exterior signs which are consistent with tenant\u2019s current or future prototypical building signs, or those of a successor regional or national retailer\u2019s prototypical building signs.<\/li>\n<li><b>Operating Covenant.<\/b>\u00a0 If the lease requires continuous operation (i.e., no right to go dark), an exception\u00a0 should be carved out for reasonable time periods for transfers and the build outs required before a successor tenant opens for business.<\/li>\n<li><b>Certain Tenant Rights only applying to the Original Tenant<\/b>.\u00a0 The lease may provide that certain rights granted under the lease are only applicable to the original tenant.\u00a0 Therefore, any transferee will not be entitled to such rights.\u00a0 For example, the lease may provide that the tenant\u2019s right to offset rent in the event of self-help is limited to the original tenant.\u00a0 Try to limit these types of restrictions or carve out an exception for subtenants of a certain minimum net worth.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Retail tenants entering into long term leases should be aware that tenants\u2019 rights to assign or sublet may prove illusory if other lease provisions effectively prevent transferring the lease to a third party.\u00a0 Here are several lease provisions that should be analyzed to ensure that a prospective transferee has the flexibility to operate its business [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1792,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[1],"tags":[18,19],"class_list":["post-1357","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-leasing","tag-retail"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>6 Tips for Retail Tenants: Traps Preventing Lease Transfers - Real Estate<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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