A relocation clause in a commercial lease allows the Landlord to relocate the Tenant to another Premises in the same building. Landlords may want to relocate the Tenant in order make space for another Tenant or to renovate the building. Regardless of the reason, the relocation has the potential to adversely impact the Tenant. For example, a retail tenant’s location in a mall can be critical to its success. A restaurant or bar’s location in a food hall can impact sales. The cost to relocate can also be significant, including business interruption.
When attorneys negotiate a relocation clause, the foregoing concerns are addressed. For example, the relocation clause may not be exercisable for a certain number of years after the commencement date, the Landlord would need to provide a minimum amount of notice, Tenant may have input on the replacement Premises, there may be certain minimum requirements for the replacement Premises (e.g. ADA access, parking, signage, proximity to restrooms, etc.) and there may be compensation to cover the cost of Tenant’s move and business interruption.
*Thank you for taking the time to read this article. This article is part of our “Commercial Leasing for Non-Lawyers,” a Blog Series on Commercial Leasing. Other aspects of commercial leasing transactions in New York are discussed in other Parts of this series.
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