Monday, February 21, 2011

Tenant Use Provision

The tenant's use provision of a lease is more critical than you might think. The way in which the tenant's use is described can be instrumental in the event that the tenant wishes to sublease the space or in the event his business plans change during the term of the lease which would require a change in his use of the premises. Both events require the landlord's approval. One of the conditions of the landlord's approval is his approval of the subtenant's use or change of use by the existing tenant. Generally, there are two ways to describe a tenant's use:

  • Very specifically (i.e. Metal fabrication operation.) 
  • Very generically (i.e. Industrial manufacturing and all other legal uses.)
The first way favors the landlord since it allows him to be more restrictive in his approval of a change of use to the building. The second favors the tenant since it gives him more flexibility with his use of the building.

Whether repping the landlord or tenant, be diligent when describing the tenant's use in the lease.

No comments:

Post a Comment