Tough Times Require Extra Precaution When Negotiating Lease Terms

The tough economic times mean that many tenants may face financial difficulties. Landlords need to be wise when negotiating lease extensions or new leases, and protect themselves from their tenant's misfortunes. There are lease provisions that landlords can use to protect themselves before and after a tenant's bankruptcy. These include: (i) using letters of credit rather than cash security, (ii) restricting assignments, and (iii) creating a net worth default trigger. While the use of such provisions must be thoughtfully considered on a case-by-case basis, it is more critical than ever that landlords consult experienced legal counsel to help shield them from their tenant's economic misfortunes.

--Reproduced with permission from Whiteman Osterman & Hanna LLP - Real Estate News Alert