Often in leases, particularly retail leases, the tenant seeks to protect the area immediately in front of its store location concerning accessibility and visibility. In that regard, landlords and tenants create language that prevents the landlord from placing any retail operation, structure or obstruction in front of the tenant’s store within a designated area in the common area (often referred to as a “Restricted Area”). However, very often due to the vagueness of the language included in this type of a provision, as well as due to the limited nature of remedies available in this type of a provision, the tenant does not receive the type of protection regarding accessibility and visibility that it thought it had negotiated. As a result, tenants should consider the following factors when negotiating accessibility and visibility protection provisions in their retail leases:
- Include a picture or site plan designating the “Restricted Area”;
- Identify any specific remedies attributable solely to this provision; and
- Limit competing uses for stores in the Restricted Area, if the existing retail tenants in the Restricted Area ever relocate from their existing locations or vacate the retail facility.
As attorneys and leasing representatives seek to conform documents and to reach agreement regarding acceptable language for the restrictions that will be placed upon the landlord in the placement of retail tenants, structures and obstructions in the common areas, often the “reality” of the individual retail facility is overlooked. For instance, a landlord may agree to not place any structure within fifteen feet (15’) of a tenant’s premises, only to find out that there exists plantings or a directory sign ten feet (10’) in front of the tenant’s premises. Moreover, a tenant may agree that any existing tenants or structures located in the “Restricted Area” as of the date of the Lease are exempted from the provision. However, the tenant may be disappointed to learn that between the time that the lease was negotiated until the time when the lease was signed, the landlord permitted a cart to be located within ten feet (10’) of tenant’s store front.
As a result, it is a good idea for the landlord and the tenant to attach to the lease a picture of the area in front of the tenant’s premises or a site plan of the area of the retail facility in front of the tenant’s premises and designate thereon any structures existing as of a certain date. Further, the language that is agreed to by landlord and tenant should be tied to the condition of the retail facility as of the date that the picture was taken or that the site plan was agreed to between the landlord and the tenant. Accordingly, a date should be placed on the picture or the site plan designating the date that landlord and tenant agreed to the condition of the area in front of the tenant’s premises.
Attaching a picture or site plan to the lease will serve at least two (2) purposes. First, it will establish a common understanding in a visual format as to what protection the tenant will be receiving. Second, it generally will cause the landlord and the tenant to review the area in front of the tenant’s premises, in order to ascertain what existing structures or obstructions either exist or are contemplated to exist in the landlord’s plan for the retail facility.
In a typical provision regarding accessibility and visibility protection in a lease, a violation of such a provision by the landlord will be a default under the lease. However, for most successful tenants, putting the landlord in default of the lease, or threatening to terminate the lease, will not be a viable remedy for the tenant or cause the landlord to relocate tenants, structures and obstructions that are in violation of the “Restricted Area” to a location outside of the “Restricted Area”. As a result, a tenant would be wise to establish certain rental concessions or other “self-help” remedies in the event the accessibility or visibility protection provision is violated.
For instance, a tenant could negotiate a reduction in its rental rate if the landlord violates the accessibility and visibility protection provision. Typically, the landlord will require notice from the tenant before the rental reduction commences, however, the tenant could argue that the landlord, more than anyone else, should be aware when a tenant, structure or obstruction is being located in the common areas of the landlord’s retail facility. Normally, threatening to reduce the rental income for a property is the strongest means that a tenant has to cause the landlord to remedy the violation of the provision. However, the tenant and the landlord may negotiate other provisions other than a reduction in the rental, in the event the provision is violated. Some examples of possible remedies include the right for the tenant to “go dark” (i.e., not operate, even though rental obligations will not cease), the right of the tenant to increase its signage (thereby increasing its visibility), or the right of the tenant to relocate to another location within the retail facility, at the landlord’s sole cost and expense.
Even though the landlord and the tenant may agree that certain existing tenants or existing structures may remain in the “Restricted Area” during the term of the lease without violating the terms of the provision protecting accessibility and visibility, the tenant may not be as accepting of such existing structure, if the use of the structure were to change. For instance, while the tenant may agree to accept an ATM machine, a directory sign or a bench within the “Restricted Area”, the same tenant may not be as accepting of tree plantings or a standing ash tray that is located directly in front of the tenant’s premises. Similarly, while the tenant may be accepting of certain existing tenants with retail uses that may be complimentary to the tenant’s use, the same tenant may find a competing use located directly in front of the tenant’s premises to be undesirable. As a result, the tenant should be careful when accepting existing tenants, structures and obstructions in front of the tenant’s premises, to limit the landlord’s ability to substitute another tenant, structure or obstruction in the same location, without the tenant’s consent. While the landlord may resist the tenant’s ability to provide its consent to changes in the common areas of the retail facility, the landlord generally will agree to certain restrictions being placed on tenants, structures or obstructions that will be located in the common areas in front of the tenant’s premises.
By implementing certain practical considerations when drafting a provision for the protection of accessibility and visibility of a tenant’s premises, the landlord and the tenant can draft a more specific provision and achieve a greater understanding as to the protection that is really being provided to the tenant. Further, the tenant can insure that it will have a more meaningful remedy, if the provision is ever violated.
American Lawyer Media, Commercial Leasing Law & Strategy Volume 16, Number 6, November, 2003