Our firm has for decades maintained an active commercial leasing practice, primarily representing landlords but in the past fifteen years or so representing many tenants as well. My practice is substantially devoted to this work, representing both landlords and tenants in sophisticated retail, office, and industrial leases.
Of late, I have seen more landlord leases containing a provision to the effect that the tenant waives its right to terminate the lease in the event of a default by the landlord, and I have encountered lawyers for landlords attempting to defend this provision. I have never included such a provision in a lease for our landlord clients (nor, to my knowledge, have my colleagues at our firm), and, on behalf of our tenant clients, I vigorously resist such provisions on the basis that I find them unconscionable.
The defense that I heard most recently from a landlord lawyer (and, really, the only defense that I’ve heard of this provision) is that “it’s market.” That may or may not be the case (he and I respectfully disagreed with one another on the point, each of us summoning evidence for our respective positions in the form of other leases we’re currently negotiating), but – in any event – I think that’s no excuse. I’ve yet to come across a landlord lawyer willing to agree that, in the event of a default by the tenant, the landlord waives its right to terminate the lease. I see no substantive (i.e., on the merits) justification for the position that in the event of a landlord’s default under a lease – no matter how egregious, persistent, or harmful to the tenant or its employees or business the default may be – the tenant cannot terminate the lease.