Shopping center leases are as varied as the locations in which malls are located and the type of tenant seeking to lease space within their boundaries. Is the mall an outdoor mall or an indoor mall? Does it currently have an “anchor” tenant, or is the landlord or management company seeking to obtain one? How much space is available to prospective tenants and how long has the mall existed? All of these questions must be considered when drafting an appropriate lease for a San Diego mall. While leases are varied in their type and form, a few provisions are essential while some are simply more advantageous to one of the parties than the other. Here are just a few examples of the essential and non-essential provisions that should be considered:

The Essential Terms of the San Diego Lease

Although it should go without saying, any lease of space in a mall in California must contain, at a minimum, the following provisions:

• The names and capacities of the parties, including whether the parties are doing business as individuals, partnerships, limited liability companies, or corporations. This term can have significant implications; if a tenant is a corporation, does the landlord intend to hold only the corporation responsible for paying the rent and performing the other covenants of the lease, or is an individual to be responsible?
• A specific description of the premises to be leased which includes, at a minimum, the square footage of the premises to be leased, where the space is located within the mall and, preferably (in an addendum or exhibit attached to the lease) a drawing of the mall and the location of the leased premises.
• The rent to be paid for the premises, generally stated in a price per square foot, together with how the rent is to be calculated and a description of any anticipated increases in the rent to be paid and when the increases are to take effect.
• The date the rent is due and a date after which the rent is considered late, as well as any penalty for late rent to be paid by the tenant.
• The term of the lease: the date the tenant is to take possession and the date upon which that tenancy will terminate.
• The date of the lease and the signatures of the parties or their designees.

The Non-Essential, but Necessary Provisions

These are but a few of the suggestions for a shopping mall lease. Although they are not “essential” in the truest sense of the word, they are, nevertheless, necessary, or at least should be seriously considered when drafting your lease. Many of the following terms are included within form leases available to landlords, but should be fully understood and considered with the help of a qualified California attorney.

• A provision dealing with destruction of the premises and what happens after the event causing destruction.
• A requirement for the tenant to be insured and the amount and type of insurance the tenant must procure to protect the landlord.
• A personal guarantee (either contained within the lease, attached as an addendum or a separate document referencing the existence of the lease) of one or more officers and/or directors of a corporate tenant, the members of a limited liability company or partners of any form of partnership.
• A mandatory mediation/arbitration provision requiring that any disputes be resolved either by mediation or arbitration (other than disputes over the payment of rent). Indeed, many leases of real property in California require that a party must attempt to mediate disputes before arbitration or filing a lawsuit to preserve their right to an award of attorney’s fees and costs (although attorney’s fees to a successful litigant are not a given in California).
• A corollary to the mediation/arbitration provision – the attorney’s fees provision. Although an attorney’s fees provision cannot award fees to one party but not the other, inclusion of this provision could certainly be worth its weight in gold, literally, to the landlord upon the tenant’s breach.

Every landlord or management company in California must understand all of these provisions and should understand the consequences of either using or not using them. To understand these provisions, as well as how and when to use them, you should have the services of a competent and knowledgeable attorney available to you. Michael Leonard, Esq. of San Diego Corporate Law is just such an attorney. To schedule a consultation with Mr. Leonard to discuss your shopping center lease or any business-related matter, you can visit San Diego Corporate Law or call (858) 483-9200.