Existing Superior Rights to Additional Space
Existing Superior Rights to Additional Space
When negotiating a right to additional space (e.g., expansion right or right of first refusal or first offer), tenants should confirm with the landlord that no superior rights exist to the same additional space. If other rights do exist, those rights will be superior and the tenant’s right will be subject to the existing rights. Typically, a tenant assumes that its rights are exclusive or superior to any other rights. That may not be the case.
Accordingly, as a part of lease negotiations, the tenant should require the insertion of the following clause in the lease: “Landlord represents and warrants that no other party has any existing rights to the [insert appropriate defined term for the additional space] that are superior to the Tenant’s rights as set forth in this Section.” At the very least, this will force the landlord to either agree to the representation and warranty, or disclose any existing superior rights. If there are any existing superior rights in which the tenant accepts, those rights be specified in the lease (or on a schedule to the lease) so as to avoid later confusion regarding which third party rights were existing and superior.
Prior to using any language or concepts from this blog entry, consult with an attorney.
Ryan Rosensteel is a real estate and construction attorney licensed in Arizona. You can contact him at rrosensteel@rrlawaz.com.