Check Other Leases Before Giving Right of First Refusal or Expansion Option

February 1, 2006

Before giving a tenant a right of first refusal (or first offer) or an expansion option for a particular space, check the other leases in your building or center to make certain that you haven't already given another tenant rights to the same space, warns Maryland litigation attorney Glenn C. Etelson. Otherwise, you could find yourself in a tough legal spot. If two or more tenants try to exercise a right or option for the space, each tenant could claim that you violated its lease by failing to let it exercise its right or option.

Before giving a tenant a right of first refusal (or first offer) or an expansion option for a particular space, check the other leases in your building or center to make certain that you haven't already given another tenant rights to the same space, warns Maryland litigation attorney Glenn C. Etelson. Otherwise, you could find yourself in a tough legal spot. If two or more tenants try to exercise a right or option for the space, each tenant could claim that you violated its lease by failing to let it exercise its right or option.

Etelson knows of owners that inadvertently gave two or more tenants a right of first refusal or an expansion option for the same space—because they didn't realize when negotiating with a tenant that another tenant already had rights to that space. Then, typically, one tenant would sue the owner for damages for giving another tenant the same rights to its space, he notes.

CLLI Sources

Glenn C. Etelson, Esq.: Partner, Shulman, Rogers, Gandal, Pordy & Ecker, PA, 11921 Rockville Pike, 3rd Fl., Rockville, MD 20852-2743; (301) 230-5200; getelson@srgpe.com.

Topics

More like this