Use clauses are important aspects of commercial lease agreements, as they define the scope of the activities a tenant may engage in while in possession of the property, thus protecting the landlord and potentially other tenants of the same building.
Without some way to ensure compliance, though, use clauses are effectively meaningless. Thankfully, there are ways to help ensure that a tenant complies with their use clause, as well as viable avenues to take when they do not.
Understanding Use Clauses
Use clauses provide stability and protection for landlords and their commercial tenants. The former have the ability to protect themselves by limiting the types of activities that occur on their leased premises, and the latter are given well-defined boundaries for the activities they may engage in on the property.
As for the types of restrictions found in use clauses, they typically depend on the circumstances at hand. All manner of use clauses are permissible in a lease, but they all tend to fit under the umbrella of a few different types of clauses, such as:
- Competition and Non-Compete Clauses: A landlord may be interested in restricting certain types of business activities to avoid facing competition with their own businesses.
- Neighborhood Use Clauses: These restrict uses of the property that may run afoul of neighborhood standards and culture.
- Environmental Clauses: Landlords often limit the uses of businesses that work with hazardous materials to prevent environmental and property damage.
- Restrictions of the Deed: There may be restrictions found in the property deed that must be obeyed by any tenant or owner of the property.
- Exclusive Restrictions: Tenants worried about competition may push for restrictions on who else may rent within the property.
Before signing any commercial lease, it is important to understand that a lease with the wrong use clauses can essentially limit your business out of existence. Therefore, it is vital to consult with a commercial lease attorney to have them review your contract and the lease clauses found therein for any issues.
Ensuring Compliance With Use Clauses in Commercial Lease Agreements
A landlord can ensure that their tenant is indeed complying with the use clauses found in the lease through the following means:
Hiring an Attorney as Soon as Possible
First and foremost, every commercial landlord should have a reliable and experienced commercial lease attorney overseeing their lease agreements, from the planning stages all the way through execution.
With an attorney working with them from the beginning, landlords receive guidance and advice from day one, which translates to getting the benefit of the lease attorney’s foresight and ability to predict and avoid issues that may arise with problematic use clauses.
Asking Lots of Questions of the Tenant
Another way of ensuring compliance with use clauses is by asking the tenant many questions related to their proposed activities. It is important that landlords understand the full scope of their prospective tenants’ activities before they move into the property.
If you have any reservations or suspicions about a certain activity, address them directly with the tenant, and remember that any stone left unturned could work in favor of the tenant.
Maintaining Regular Communication With the Tenant
When you lease to a tenant, maintaining regular contact is important for various reasons, including assurance that they are in compliance with the use clauses of their lease.
Failure to regularly check in on a tenant could lead to the tenant engaging in unauthorized use of the property, but if the tenant knows you to be vigilant, they are more likely to stay within the scope of their lease.
Perhaps one of the most effective methods of ensuring use-clause compliance is to be firm with your demands. A little flexibility is good, but if a tenant knows you to be a landlord who will bend their own rules, you may have problems making them fully comply with your use clauses.
Meet With a Commercial Lease Attorney Today!
If you’re dealing with commercial lease issues in the New York metropolitan area, attorney Levy Goldenberg and his team may be able to help. Call for a consultation, and let’s discuss your case.