Ban Tenants' ATMs at Your Center

Automated teller machines (ATMs) have become so popular that you no longer have to go to a bank to find one. They're everywhere—in restaurants, bars, dry cleaners, supermarkets, wholesale goods stores, delicatessens, and cash-only establishments. In fact, several tenants in your center may already have ATMs or may be thinking about installing them.

Since you probably never expected that your tenants—even generic retail tenants—would be putting ATMs in their spaces, you probably haven't put protections in your leases. This means you can't control the spread of ATMs. And that could lead to big problems.

Problems Caused by Tenants' ATMs

When you have no control over a tenant's right to install ATM machines in its space, many problems can occur. For example:

Exclusive violations. If you give one tenant an exclusive to operate an ATM, you may get into trouble if another tenant installs an ATM. The tenant with the exclusive could sue you for violating its lease.

Lost leasing opportunities. You might want to lure a tenant—like a bank—to your center. And the bank may demand an ATM exclusive. But you may be unable to meet its demand if other tenants have already installed ATM machines in their spaces. That means you've lost a desirable leasing opportunity.

Less business for your ATM. You might want to install your own ATM in the center's common area as a convenience to your center's customers, encouraging customers to spend more money in the center and enabling you to collect ATM fees. But a rival tenant's ATM could undermine your goals by drawing customers away from your ATM.

Undesirable machines. Your tenants' ATMs might attract too much traffic—or worse yet, crime—to your center. If someone is attacked or robbed at an ATM in your center, you can expect that the victim will try to sue you.

Ban Tenant ATMs in New Leases

That's why San Francisco attorney Alan C. Gennis recommends that you consider having all your new leases ban your tenants from installing ATMs at your center. Since the ban applies only to tenant ATMs, you can still install your own ATMs in the common areas, he adds.

One way to get the ban is to include the tenant's installation of an ATM in the list of “prohibited uses” in your standard form of lease. Although the ban won't help you with leases that are already signed, it gets you started on regaining control of the ATMs in your center, says Gennis.

To include the ban, add the following language to your prohibited use clause:

Model Lease Language

Tenant shall not install an automated teller machine within the Premises or any part of the Common Areas.

CLLI Source

Alan C. Gennis, Esq.: Partner, Coblentz, Patch, Duffy & Bass, LLP, 222 Kearny St., 7th Fl., San Francisco, CA 94108; (415) 391-4800.