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If you currently own or are looking to acquire a shopping center, office building or other commercial property, these transactions may bring with them some time consuming surprises and costly legal fees if existing tenants owe unpaid rent. An Illinois Appellate Court recently addressed this issue in 1002 E. 87th St. LLC v. Midway Broadcasting Corp., 2018 IL App (1st) 171691 (June 5, 2018), and ruled in favor of a commercial tenant after a new owner acquired a commercial building and attempted to collect accrued unpaid rent owed to the previous landlord. In affirming the lower court’s ruling, the court held that a subsequent landlord did not have standing to sue for unpaid rent that had accrued prior to the conveyance and explained that such standing is a right remaining with the original landlord to whom the unpaid rent is owed. Additionally, unlike other debt obligations, the court differentiated rent accrual as a chose in action that is not assignable. The decision raises questions about the strength of assignment and non-waiver lease provisions and also rights of succeeding landlords. Further, it raises concerns about the applicability of certain non-waiver lease provisions, in particular, the assignability of lease rights and obligations. Landlords, tenants, and lenders alike are now questioning whether this decision may facilitate tenants’ evasion of contractual duties upon acquisition or disposition of real estate.
By Mark Morfopoulos
Restricting a tenant’s right to transfer the property it is leasing to a third party is a key component to any lease. Many lenders require landlords to obtain lender consent before the transfer is effective. Failure to obtain such consent could lead to a landlord’s default under the terms and conditions of the loan documents, so it is imperative for a landlord to review its loan documents each time it receives a request from a tenant to transfer its interest under the lease.
By Natalie Dolce
Welcome to the evolving world of retail — a world that is geared toward changing the way people engage in retail and retail destinations feature a blend of entertainment, experiences and services.
By Jonathan B. King
The growing interest in alternative fuel sources may be a boon for property owners seeking new ways to generate profits and savings. But care should be taken when a roof is the proposed site of a solar-panel installation, whether managed by a property owner or by a lessee.
Option to Buy Is Exercised, and ‘Tenant’ Is No Longer a Tenant