Relocation Clause

Rolocation Clause in your lease!

Most leases have a relocation clause that gives the Landlord the right to move a tenant to other spaces in the building and the Lease remains in full effect a tenant will be paying either more or less rent based on the new space size.

Definitely a clause that can cause tenants major problems.

I have seen leases that allowed the landlord to relocate a tenant even before she took occupancy.

Imagine you leased a space for its magnificent view of the city from the 16th floor and ended up with a space on the other side of the building on the 2nd floor overlooking the garbage bins.

Or a retail tenant can be relocated from a prime traffic area to a rarely travelled corridor.

And what if it happens three quarters of the way through a lease and there is no provision for a tenant to be compensated for loss of business and/or money that must be spent on new leasehold improvements, new stationary and moving costs including expensive wiring and telecommunications

It can and does happen at the landlord’s whim unless you negotiate changes to the standard lease.

Of course this must all be negotiated in the initial documents and before anything is finalized. If a tenant waits until his attorney negotiates the lease he is most often out of luck

This presents a number of problems for a tenant beyond the hassles involved in moving to new space. In fact for retail tenants, it can mean the difference between business success or failure.

Office tenants will want to either have this relocation clause deleted from their lease but often this will not be granted by the landlord.

In that case, the tenant will want to negotiate an addition to the wording so that all costs of relocation are paid by the landlord including all leasehold improvements, that it receives comparable space in the building with the same views and the same rental costs if the space is larger than the current space and less if it is smaller than the current space.

In addition, all stationary, legal and moving costs should be paid for by the Landlord and the move should take place after business hours.

Retail tenants may want to try to make it subject to the tenant's approval of the new space and/or subject to termination of a lease with full compensation for unamortized improvements.

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