Use Restriction Does Not Apply to Tenant's Buildings

April 13, 2009
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A department store tenant leased space in a shopping center and also used the building next door to the center, which it owned. The tenant decided to lease the adjacent building to multiple tenants. The shopping center owner sued to stop the tenant. It claimed that its lease required the tenant to operate a “quality non-discount department store” in both the tenant’s building and in the shopping center space.

A Nassau County court ruled that the tenant could use its building in any it wanted. The lease restriction applied only to the shopping center space. The parties were sophisticated business people. If they had wanted this restriction to apply to the tenant’s building, they could have drafted the appropriate language in the lease [Fifth Avenue of Long Island Realty Assoc. v. KMO-361 Realty Assoc., May 1995].