USE CLAUSES - Understanding Commercial Leases - Part 5

This is Part 5 of a multi-part series on Understanding Commercial Leases

USE CLAUSES

PURPOSE - A use clause outlines what “is” and “is not” an allowable use of the premises

TENANT MIX - Having tenants with various uses that, taken together, provide a good “mix” of services that will increase the likelihood of their success and that of the property

POTENTIAL TRAPS

• Allowing a new tenant a use that violates another tenant’s exclusive use rights
• Having a bad tenant mix
• Having an undesirable use (porno shops, hazardous businesses etc.)

LANDLORD'S INTEREST

• Having a good tenant “mix”.
• Making sure use clause is as restrictive and unambiguous as possible.
• Avoid giving exclusives whenever possible.
• Make sure any exclusives given do not conflict with existing tenants or that exclusive does not apply to existing tenants.
• Prohibit undesirable uses

TENANT'S INTEREST

• Having a use clause that is as unrestrictive as possible or that allows as many actual and potential future uses as possible
• Getting exclusive rights for certain uses. (For example, you might want to be the only nail salon in the shopping center, or the only coffee shop).