Monday, June 4, 2018

Recent Court Rulings Demonstrate Value of Operating Covenants

NREI
Many retail leases contain operating covenants included in a long list of boilerplate provisions.

Tenants agree to operate their stores for a minimum number of years during the lease term, but also agree to how many hours they will keep their doors open each week—usually conforming to the normal business hours for other tenants in the shopping center.

These provisions have not typically been heavily negotiated, and retail landlords have not had much success in enforcing them. When a tenant announces that they are closing their doors, the landlord’s best option tends to be a negotiated termination deal.. . . more