IT IS UP TO THE TENANT to investigate whether or not the tenant has a viable co-tenancy claim against the landlord. Even if a lease provides that the landlord is required to notify a tenant when co-tenancy conditions are not satisfied, you should not sit back and assume the landlord will do so. Tenants need to gather the facts to determine if they are entitled to reduced rent or other remedies based on co-tenancy provisions in a lease.
There are many methods to investigate a co-tenancy claim. Some co-tenancy information can be obtained by searching the Internet and looking at the shopping center website. A walk-through of the shopping center also can reveal co-tenancy facts. Site management can be asked to report on the tenants of the center and on the vacancies.
Many situations will require a tenant to submit an inquiry to the landlord to determine the facts supporting a co-tenancy claim. This type of request should be in writing. It should be as specific as possible, and it should include a request for occupancy information for every square foot of the center. This means the name of the tenant and its business, the square feet occupied by that tenant, and whether or not the tenant is open for business.
Asking the landlord for occupancy information on a quarterly basis, even if you don’t suspect a co-tenancy claim, is a good best practice. If the landlord refuses to provide the information in response to requests, a tenant can argue that any delay in asserting your co-tenancy rights was a result of the landlord’s improper conduct.
Assert your co-tenancy rights
If your co-tenancy conditions are not satisfied and you are entitled to relief under the lease, make a demand to your landlord. State your claim in writing. Be clear about the grounds of your claim and the remedy you seek, and cite to the relevant provisions of the lease. If your lease requires you to “elect” a particular remedy, be clear that you are doing so under the lease. If you have multiple claims based on multiple leases against the same landlord, combine them in a single letter. A landlord may be more responsive if your claim is larger. If there are multiple violations identified with the same landlord, you could mail all in the same overnight pack for effect.
Be prepared for push-back from the landlord. The landlord may argue a different interpretation of the co-tenancy provision. Plan ahead to explain your interpretation based on the language in the lease. The landlord also may argue that you waived the co-tenancy rights by waiting too long to assert them. Be prepared with a justification for any delay. For example, some leases require the landlord to notify the tenant when co-tenancy conditions are not satisfied. In such cases, if the landlord failed to notify the tenant, any delay in asserting a co-tenancy right should not be the fault of the tenant.
Even if the landlord ignores a request or refutes your rights to relief, continue to state your case. Be persistent. It is important to demonstrate that not only is your claim solid, but you will pursue it. Hiring a lawyer may be the only way to convince a landlord that you are willing to pursue your co-tenancy claim. When a landlord is faced with the prospect of hiring an attorney to defend a legal claim, a landlord may be more willing to negotiate a resolution of the dispute.
NRTA’s Classroom live features a presentation on co-tenancy in a 4-part Real Estate Portfolio Management series.