Address All Areas of Mixed-Use Property

August 11, 2016
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It’s crucial to carefully examine what your lease definitions cover when you’re negotiating a lease for space at a mixed-use property. Pay particular attention to the owner’s obligations for nonretail areas. Most shopping center leases use the term “shopping center” to describe the property. But in the context of a mixed-use development, an owner could mean for the term “shopping center” to refer only to the retail portion of the development. If the lease addresses the owner’s and your rights and responsibilities at the “shopping center,” it won’t address your concerns relating to the nonretail portions of the development, such as residential units.

For example, if you want the owner to rebuild the residential units after a casualty, simply requiring the owner to rebuild the shopping center won’t cover that obligation if the residential units aren’t included in the definition of “shopping center.” So remember to ask your attorney to include those areas in the definition of shopping center or add a separate requirement to the lease to rebuild those parts of the property if they’re damaged. Otherwise, the owner could argue, and a court might agree, that it’s not obligated to repair nonretail areas there.