When things go wrong, or even extremely well, a commercial tenant may need an exit strategy with respect to its lease. In addition to the common remedies of assignment and subletting, it can be extremely helpful to have a termination option.
In today’s newsletter we discuss termination options and provide ten suggestions to make them as clear and unambiguous as possible.
Alan KatzMintz & Gold LLP
Can We Have a Termination Option for the Knicks?With the onset of a new year, I feel that I should come clean and make a confession.While I happily admit to being a New York Mets fan, the sad and shameful truth is that I am also a New York Knicks fan.
There is a certain charm to the Mets’ haplessness, but the Knicks are a disaster that you would not even wish upon a landlord.
The Knicks have had 13 different coaches and only three winning seasons this century. They are the most poorly managed team in the NBA thanks to their owner, James Dolan, who last season traded their best player, Kristaps Porzingis (and just when I learned to spell his name), for a snickers bar and the draft rights to two Radio City Rockettes.
In early December, billionaire Steven Cohen agreed to purchase the Mets.
Actually, Jason Gay of the Wall Street Journal recently admonished Michael Bloomberg for running for President to save the world when he instead could do something truly merciful for humankind and buy the Knicks.
In commercial leasing, tenants too can need a mercy rule and sometimes there is a way out (with snack optional).
Recently we were involved in an unusual transaction (and no, wise guy, the unusual part was not that the tenant was reckless enough to retain us).
The tenant’s view was that he would know in two or three years if his business was going to make it and would gladly trade away other customary rights in order to have the flexibility to walk away.
Of course, any tenant with a right of termination requires that the option be clear and clean and without ambiguity.