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This blog focuses on real estate, land use and construction-related topics affecting Virginia and the Washington, D.C. metro area. With topics ranging from contract drafting and negotiation to local and regional land use project updates, the attorneys at Bean, Kinney & Korman provide timely insight and commentary on the issues affecting owners, builders, developers, contractors, subcontractors and other players in the industry. If you are interested in having us cover a specific topic, please let us know.

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Posts from January 2014.

Part one of this post explained acceleration of rent provisions and how various courts around the country have scrutinized these provisions and taken varying positions on their enforceability and validity. Part two of this post, below, will discuss how landlords can include enforceable acceleration of rent provisions in their leases.

After first taking into account the laws of the applicable jurisdiction, the landlord needs to carefully review the proposed acceleration of rents provision to verify its enforceability under such law. Revising a potentially unenforceable clause to a simple and more reasonable approach could be beneficial to all parties.

During the course of rezoning a property, it is common for landowners to offer incentives to a locality to grant the rezoning. Such incentives often take the form of proffers, which are voluntary conditions the landowner agrees to follow as part of obtaining the rezoning. A landowner might proffer that they will construct improvements, such as a local road or a park. Just as commonly, a landowner could proffer cash in lieu of constructing the improvement.

Given this back and forth, the General Assembly has enacted laws that serve as ground rules for the timing and types of proffers a locality can accept. One such rule enacted in 2011, is that, in a residential rezoning, a locality may only collect or accept cash proffers after the locality completes a final inspection and before it issues a certificate of occupancy.

Part one of this post will explain acceleration of rent provisions and how various courts around the country have scrutinized these provisions and taken varying positions on their enforceability. Part two of this post will discuss how landlords can include enforceable acceleration of rent provisions in their commercial leases.

What is an Acceleration of Rent Provision?

An acceleration of rent provision gives the landlord the right, after a default by the tenant, to demand the entire balance of the unpaid rent owed under the lease for the entire remainder of the term to be paid in one lump sum. Under the law of most states, if there is no acceleration of rents provision, the landlord is typically entitled only to collect rent from the tenant as it becomes due under the lease each month for the remainder of the term.

Although it is a familiar term in the zoning lexicon, the variance is one of the least understood devices in the zoning toolbox. Known to dirt lawyers as the “escape hatch,” the variance gives relief to property owners from zoning requirements where the strict application of the zoning ordinance would be unconstitutional as to a particular property, often because of a unique characteristic of the site.

While simple in theory, getting to the “escape hatch” has proved more elusive in actual practice. In Virginia, local boards of zoning appeals (BZA) have authority to grant variances, subject to the statutory standards in Virginia code section 15.2-2309.

January 13, 2014
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Part one of this article series explained a landlord’s obligations under commercial leases and the remedies available for a commercial tenant should a landlord default. Part two of this article will explain how and when to include offset provisions in a lease.

As mentioned above, landlords will strongly resist including an offset provision in the lease.. In many cases, their lenders will prohibit such provisions for most ordinary lease transactions. The landlord and its lender demand and anticipate an uninterrupted income stream of rental payments and may consider this a deal point in the lease negotiations. In most situations, only the most creditworthy tenant taking sizeable premises with leverage in the transaction should demand the right to offset (perhaps an anchor or near-anchor tenant in the retail context or a financially sound national tenant taking significant multiple floors in an office building).

January 5, 2014
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Part one of this article series explains a landlord’s obligations under commercial leases and the remedies available for a commercial tenant should a landlord default. Part two of this article will explain how and when to include offset provisions in a lease.

A commercial tenant’s right to remedy a default by the landlord by performing the required work itself and then offsetting the costs of such work against future rental payments is likely the most immediate and effective remedy a tenant could ever have. However, a tenant needs to closely review the lease agreement and know the local applicable law before ever deciding to take such an aggressive measure. Most leases (and the laws of most states, if the lease is silent) essentially prohibit the right of offset, so the sophisticated and creditworthy tenant will need to negotiate for such a right before the lease is finalized.