A lease provision that ties a tenant's rent obligation or occupancy requirement to the presence of specific anchor tenants or a minimum occupancy level in the property. If the conditions are not met, the tenant may pay reduced rent or terminate the lease.
Co-tenancy clauses establish conditions precedent (opening co-tenancy) and ongoing conditions (operating co-tenancy) based on the occupancy of the property. Opening co-tenancy requires that specified anchors or a minimum percentage of the property be occupied before the tenant must open. Operating co-tenancy provides rent relief or termination rights if anchors close or occupancy falls below a threshold for a specified cure period. Remedies range from paying percentage rent only (no base rent) to outright lease termination after an extended vacancy period.
A shopping center loses its anchor tenant, reducing foot traffic significantly. The landlord argues the co-tenancy clause does not apply because the anchor "technically" still has a lease, even though the store has been dark for over a year.
Ensure your co-tenancy clause specifies "open and operating" rather than just "leased" or "occupied." Define exactly which anchors or square footage thresholds trigger the clause, and include a hard termination right after a specified cure period.
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Find My OverchargesThis page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.
