Keep Tabs on Co-Tenancy Right

If you rent space at a large shopping center or mall with many tenants, you might not find out until it’s too late that your co-tenancy right has been triggered. Don’t get into a situation where the owner can argue that you’ve waived your right by not objecting. Instead, negotiate the right to get a co-tenant roster from the owner. A co-tenant roster can help you to monitor occupancy—but you’ll need to carve out this right in advance, or the owner won’t be obligated to provide it later.

Protect your co-tenancy right in two ways:

Protection #1: Require roster. If your co-tenancy right is triggered without you knowing it and you don’t act immediately, it could be seen as a waiver because you waited too long. But when the co-tenancy provision is based on a certain percentage of the leasable area of the shopping center being open, it’s extremely difficult to accurately determine whether that percentage is being met. In order to track the requirement, you’ll need detailed information on the open tenants at the shopping center, including the leasable area they are occupying. Unfortunately, without an express obligation to the contrary in the lease, the owner won’t necessarily do anything to help you obtain this information. Add the following language to your lease to require the owner to provide you with a co-tenant roster:

Model Lease Language

Co-Tenant Roster. Within ten (10) days following Tenant’s request therefor, Landlord shall provide Tenant the following information, and shall certify to Tenant that the information is true and correct as of the date such information is provided to Tenant:

(i) The total Gross Floor Area of the Shopping Center;

(ii) All tenants that are open and operating, and the Gross Floor Area of the premises occupied by said tenants;

(iii) All space that is unleased, and the Gross Floor Area thereof; and

(iv) All space that is leased to tenants who have ceased operating, the date of cessation, and the Gross Floor Area of the respective premises.

Protection #2: Actively monitor center. Any way you approach it, monitoring your building or center is going to require some extra work. While there are several approaches, the most efficient are using in-store employees and site managers to send you an alert whenever they notice any changes—like new or missing signage in the center. For example, if one of your employees sees an anchor tenant posting a “going out of business” sign on the front of its store, that employee should let you know immediately so that you can track the anchor’s activity.