A landlord secures an anchor tenant with a big-name, stable, and successful chain store. The landlord negotiates that a percentage of this successful tenant's gross sales out of the landlord's location will constitute a portion of the rental payments.
You Thought You Had a Radius Clause: Wells Fargo v. Diamond Point Plaza May Change Your Mind
A landlord secures an anchor tenant with a big-name, stable, and successful chain store. The landlord negotiates that a percentage of this successful tenant's gross sales out of the landlord's location will constitute a portion of the rental payments. In order to protect his percentage rent, the landlord ensures that the lease contains a provision that (it thought) would forbid the tenant from opening another store in close proximity to the landlord's property. Therefore, the landlord has sufficiently guaranteed not only a base rental payment, but also a portion of the tenant's success, and it is confident the tenant will be very successful in the area. The landlord is thrilled, right? Maybe not. New case law indicates that courts may interpret the landlord's lease provision protecting against a new store, a radius clause, in a manner different from the way the landlord had intended.
By
Gary A. Goodman And Elizabeth A. GableThis premium content is locked for LawJournalNewsletters subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN LawJournalNewsletters
- 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
Already have an account? Sign In Now
For enterprise-wide or corporate access, please contact Customer Service at [email protected] or call 1-877-256-2473.
