Common Commercial Lease Clauses- Round 2

We posted about several common commercial lease clauses a few weeks ago and today we are continuing our exploration. We’re talking about compliance with government directives, payment of services, percentage lease/rental only:

 

The Compliance with Government Directives Clause is pretty straightforward. All it means is that the tenant is promising, per their leasehold agreement, that they will comply with all government directives pertaining to the property.  These directives could include zoning laws, capacity requirements, etc. This clause is ensuring that while occupying the property, the tenant will obey all laws pertaining to the property itself.

 

The Payment of Services Clause is used in a lease when services are performed on behalf of the tenant and then are charged back to the tenant. If services such as janitorial, snow removal, maintenance and repairs, security etc. are provided by the landlord, the Payment of Services Clause will spell out the stipulations for the tenant being charged back for these services.

 

The Percentage Lease/Rental Only Clause is used in a percentage rent type lease, when the rent is based on a percentage of the monthly or annual gross sales made on the premises. This type is lease is common for retail tenants. The “rental only” clause provides that if the landlord makes a more favorable deal with a tenant other than the anchor tenant, the landlord must amend the lease of the anchor tenant to match the more favorable terms.  This clause is very rare as it is only beneficial to the tenant. The rental only clause makes it difficult for the landlord to market vacancies without the possibility of rent reductions.

Katie Craven
Katie Craven is Marketing, Communication and Brand Manager at Watchdog Real Estate Project Managers, a real-estate consulting firm that provides owner’s representation and project management services. More about Watchdog Real Estate Project Managers as well as additional blog posts can be found here.
Free E-Book
Lorem ipsum dolor sit amet, consectetur adipisicing elit

Ask a Project Manager

Questions? We're here for you.