Commercial space leasing can quickly become complex especially when you are under pressure negotiating the best deal to protect your valuable business interests. An exclusive use clause, also referred to as a non-competition clause, is an important component to consider negotiating with your landlord. Here are a few of the reasons why your business should consider an exclusive use clause.
When properly drafted this clause restricts your landlord from leasing space to additional tenants for the same business purpose as your business. This restriction will protect your business from competition in the same business complex which may be vital to your success. It also promotes diversity of tenants and customers that may in return increase your customer base and profits. Also, if defined with a meaningful and reasonable scope, exclusive use clauses can also benefit the landlord’s profitability from rent revenue.
Here are three key aspects to remember in drafting exclusive use rights provisions:
1. Set a reasonable and clear scope for the exclusive use clause. Maximize the competitive advantage of an exclusive use provision while not unreasonably restricting the landlord’s ability to conduct business.
2. Obligate the landlord in the exclusive use clause to include a copy of the provision in all tenant leases, property conveyances, and record the lease for notice to all tenants and prospective buyers of the exclusive use clause.
3. Include details on enforcement and remedies for a breach. Leases tend to be landlord friendly with limited language regarding tenant rights and procedures for landlord breach. In order for your exclusive use provision to be effective outline the enforcement and breach remedy.
Are you considering leasing commercial space or due for a lease renewal? Discuss with an attorney about how you can include an exclusive use clause in your next commercial space lease negotiation.
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