A lease provision allowing the landlord to take back (recapture) all or part of the leased space under specified circumstances, such as when the tenant requests to assign or sublease.
Recapture clauses give the landlord the right to terminate the lease or reclaim space when certain triggering events occur. The most common trigger is the tenant's request to assign or sublease: instead of consenting, the landlord terminates the lease and re-leases the space directly. Other triggers include the tenant going dark, failing to meet sales thresholds, or requesting a reduction in space. Recapture eliminates the tenant's ability to profit from a below-market lease through assignment and gives the landlord control over tenant mix and rental rates.
A tenant with a favorable below-market lease attempts to assign to a qualified buyer at a premium. The landlord exercises its recapture right, terminates the tenant's lease, and re-leases the space at current market rates, capturing all of the below-market value.
Negotiate to remove recapture rights entirely or limit them to situations where you are subleasing more than 50% of the space. At minimum, carve out assignments to affiliates and assignments in connection with a business sale from the recapture trigger.
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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.
