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LEASE AGREEMENT REFERENCE GUIDE 490: DRAFTING THE TENANT DEFAULT CLAUSE $49.95   |
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Excerpt
A Look At The Pro-Tenant Tenant Default And Remedies Clause
It is usually pretty easy to spot a pro-tenant tenant default clause--it's short in length and short on specifics. That's because the pro-landlord default clause contains extensive language that gives a wide range of remedies to the landlord in the event of tenant default (see, for example, the pro-landlord tenant default clause in this LARG's Lease Clause Critique). When the tenant has the leverage to draft its own tenant default clause, it leaves as many arrows out of the landlord's quiver as it can. The tenant default clause set out below is totally inadequate from the standpoint of the landlord. It requires thirty days written notice to the tenant for defaults (whether they are monetary or nonmonetary), and the only express remedy granted to the landlord for the tenant's defaults is termination. Landlords almost always prefer tenant default clauses which give far shorter written notice for tenant defaults, and which clearly specify that abandonment or vacation of the premises by the tenant is also a default. Landlords also prefer language which expressly obligates the tenant to commence to cure the default complained of in the notice, and which requires the tenant to diligently prosecute remedying the default to completion. Further, pro-landlord tenant default clauses usually set out a broad range of remedies which the landlord can exercise in the event of a tenant default. Available Landlord Remedies The language describing the remedies available to the landlord in the event of default should, of course, specifically mention any state law remedy available to the landlord which must be expressly referred to in the lease in order for the landlord to avail himself of that particular remedy (e.g., Section 1951.2 of the California Civil Code pertaining to the amount the landlord can recover under the lease in excess of the amount of rental lost for the premises that could have been reasonably avoided by the landlord). Absent such an express reference, the remedy may not be available. At a minimum, landlords like to include language which: (a) defines "rent" to include minimum rental and any other sums required to be paid by tenant under the lease, (b) gives the landlord the right to re-enter the premises, with or without termination, and remove the tenant's property or equipment and store it in a public warehouse or otherwise at the sole cost and expense of the tenant, and (c) defines how proceeds from reletting the premises to third parties will be applied to amounts owned by the tenant to the landlord. Pro-Tenant Tenant's Default And Remedies Clause 12. No default or breach of any covenant or condition on the part of Tenant shall exist unless and until Landlord serves upon Tenant a written notice, which specifies with particularity the alleged default or breach claimed to exist, and Tenant fails to commence the performance or observation thereof within thirty (30) days after the receipt of such written notice. In the event of such default or breach on the part of Tenant, Landlord may terminate this lease and re-enter the premises and cause the removal of all persons therefrom.
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End of Excerpt