Protect Yourself Against Tenant’s Counterfeit Operation

The new trend toward holding commercial landlords liable for the illegal activities of their tenants is extremely disconcerting. It requires landlords to take unprecedented measures and exert significant efforts to protect themselves from liability exposure to court-awarded damages for their tenant’s illegal activities. And lawsuits brought by luxury brands against landlords seem to be ramping up. So how can you protect yourself from being embroiled in the fight against counterfeiters?

Use Strategic Lease Terms

No landlord wants to see illegal activity occur on its premises. However, the question arises as to what duty a landlord has to ensure that there is no illegal activity. Recent court decisions are placing greater burdens on landlords. The best strategy for landlords to prevent liability for the illegal actions of their tenants is to include protective language in their leases—as well as practicing vigilance in their oversight duties. Negotiate three essential provisions in your leases:

• Use Restriction;

• Landlord’s Right to Enter the Premises; and

• Indemnity.

  For language to include in these provisions and tips on how to effectively oversee tenants that pose counterfeiting concerns, see "How to Avoid Liability for a Tenant's Illegal Activities," available to subscribers here.