Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Commercial Leasing Law & StrategyKickerFeaturesSectionsNewsLJN Newsletters

How to Fight Subordination of a Leasehold

By John H. Lewis

Landlords are regularly asked to consent to a tenant's financing, secured by the tenant's equipment and other assets. Such consent proposals are typically accompanied by a further request for the landlord to waive or subordinate its interest in the tenant's personal property, if any, in favor of the claim and lien of the tenant's lender. Today, lenders often go so far as to seek the subordination of the landlord's interest in the lease itself to the interest of the lender under the financing. In response, landlords will routinely resist any subordination of the leasehold, and will require various protections such as excluding fixtures from the lender's collateral and providing that if the lender forecloses on, or takes possession of, the collateral, it will do so peaceably and in compliance with applicable legal process, without interference with the operations of the landlord's shopping center or the businesses of other tenants, and with an obligation by the lender to repair any damage to the premises resulting from the removal of the collateral.

The documentation described above is fairly routine. However, what if the tenant's financing is secured not only by the tenant's personal property, but by a mortgage of the tenant's leasehold as well? In this case, the landlord and the lender will grapple with issues such as notice to the lender and a right to cure any tenant default. The lender will often request (and the landlord will typically resist) an additional cure period beyond any such period applicable to the tenant, together with a right to foreclose on the leasehold mortgage and step into the shoes of the tenant, while also attempting to limit or eliminate the lender's responsibility for the sins of the tenant (with the landlord again resisting such efforts).

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Bankruptcy Sales: Finding a Diamond In the Rough Image

There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.

Judge Rules Shaquille O'Neal Will Face Securities Lawsuit for Promotion, Sale of NFTs Image

A federal district court in Miami, FL, has ruled that former National Basketball Association star Shaquille O'Neal will have to face a lawsuit over his promotion of unregistered securities in the form of cryptocurrency tokens and that he was a "seller" of these unregistered securities.

Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It Image

Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?

Blockchain Domains: New Developments for Brand Owners Image

Blockchain domain names offer decentralized alternatives to traditional DNS-based domain names, promising enhanced security, privacy and censorship resistance. However, these benefits come with significant challenges, particularly for brand owners seeking to protect their trademarks in these new digital spaces.

Coverage Issues Stemming from Dry Cleaner Contamination Suits Image

In recent years, there has been a growing number of dry cleaners claiming to be "organic," "green," or "eco-friendly." While that may be true with respect to some, many dry cleaners continue to use a cleaning method involving the use of a solvent called perchloroethylene, commonly known as perc. And, there seems to be an increasing number of lawsuits stemming from environmental problems associated with historic dry cleaning operations utilizing this chemical.