In the Spotlight: Exploring the 'Gray' Between Ground and Space Leases

There are frequently varying shades of gray between a true ground lease and a space lease, particularly in retail real estate. The true ground lease is exactly that: a lease of ground — dirt — generally for a long term where the landlord has few, if any, obligations and, in fact, few rights other than to collect a rent stream which can only be interrupted in extremely limited circumstances. A space lease, of course, provides a landlord with varying responsibilities from construction to maintenance, repair, enforcement of other tenant obligations, etc., as well as creating various landlord rights such as use restrictions, radius restrictions, continuous operation provisions, etc. Landlords often get into trouble when they blend concepts from both ground and space leases without carefully considering whether the blend actually works throughout the lease term.

4 minute read March 31, 2005 at 10:01 AM

By

William Crowe