2015.02

Commercial Leasing Series - Relocation Clauses

By: Laila Parvez

Any clause contained in a lease which allows the landlord to move the tenant to alternate premises without the tenant’s consent should be deleted in its entirety.  After all, the tenant has negotiated to lease the specific space it is occupying.  However, if the landlord is not agreeable to deleting such a clause, the tenant must, at a minimum, negotiate language that would require the alternate premises to be comparable to the original premises in all material ways, including rental rate, size and accessibility.  In no event should the tenant be required to pay a higher rental rate per square foot or a higher rent amount because the alternate premises are larger.  While many landlords are agreeable to reimbursing the tenant for its reasonable direct moving costs (eg. hiring of movers and trucks), they are unwilling to pay for the tenant’s indirect costs, which may be substantial and include the cost of printing new stationary, website amendments to set out the new address, the productivity lost as a result of packing and unpacking, loss or damage to furniture or equipment, etc.  The tenant should insist that these costs are reimbursed.  The landlord should also be responsible for all undepreciated capital costs of the tenant’s leasehold improvements in the original premises. The tenant’s goal is to include language in the lease that would require the landlord to be responsible for all reasonable costs associated with the move.

Some leases, especially leases for older buildings, give the landlord the right to unilaterally terminate the lease prior to the expiration of the term if it intends to demolish or substantially redevelop the building.  This clause should be deleted as the tenant would have incurred costs in moving to its premises and commencing its operations from there with the expectation that it would remain in those premises for the duration of the lease term.  If however, the landlord is unwilling to delete the clause in its entirety, the tenant should negotiate as long a notice period as possible so that it has sufficient time to find alternate premises and a termination fee to cover all of its moving costs.

For a discussion of additional items relating to commercial leasing from the tenant’s perspective, please click here.

 

For more information on commercial leasing matters, please contact Laila Parvez at (416) 368-0491 or by email at lparvez@businesslawyers.com.

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