Carve Out Right to Rent Acceleration

Many office building and shopping center owners build remedies into their agreements so they can enforce the lease terms they’ve negotiated with their tenants. But even though an owner’s remedies can redress many situations, it still behooves you to give your tenant a strong incentive to stick to the lease terms in the first place—especially for big-ticket obligations like paying rent.

Getting the right to accelerate the tenant’s rent, which allows you in the case of its default to immediately collect all of the rent that’s going to be due through the balance of the lease term without having to wait for it to be paid in monthly installments, can really motivate a tenant. That's because being forced to pay such a large lump sum will probably deal a financial blow to the tenant, which might have defaulted because it’s already having financial problems.

But in order to make rent acceleration work in your favor, you should carefully draft these three sections of your lease that will work well together to require a tenant to adequately compensate you for your losses if it defaults on its rent obligation:

• Remedies. The remedies section of your lease can help you do two important things: increase the tenant’s security deposit, and secure a right to possession of the space.

• Damages upon termination. Your damages upon termination section should at the very least spell out what the tenant owes upon default in terms of accrued rent that is payable, and damages.

• Re-letting of premises. Use the re-letting of premises section of your lease to make the tenant pay for new improvements that you a replacement tenant might require.

For a complete rent acceleration strategy and model lease language for these three sections of your lease, see “Use Three Key Lease Sections in Rent Acceleration Strategy,” available to subscribers here.