Exclusive Use and Other Leasing Restrictive Covenants

What do exclusive use and other leasing restrictive covenants encompass?

Exclusive use and other leasing restrictive covenants are provisions within commercial lease agreements that limit or restrict the landlord or tenant from certain activities. In Florida, exclusive use clauses grant a tenant the exclusive right to conduct a specific business or sell certain goods within a specified area, typically a shopping center or mixed-use property. Exclusive use ensures the landlord does not lease space to competing companies, providing the tenant with a competitive advantage. On the other hand, restrictive covenants limit a tenant’s use of the leased property or restrict a landlord from certain activities, such as leasing to specific types of businesses.

For example, a supermarket tenant may negotiate an exclusive use clause to prevent the landlord from leasing space to another supermarket or grocery store within the same shopping center.

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Which laws and regulations apply to exclusive use and other restrictive leasing covenants in Florida?

In Florida, exclusive use and leasing restrictive covenants primarily follow common law principles and lease agreement terms. Since commercial leases are primarily contractual, courts in Florida generally rely on the lease’s language and established principles of contract interpretation to determine the rights and obligations of the parties involved.

One key Florida statute that may be relevant to exclusive use and restrictive covenants is Florida Statute §542.335, which governs the enforceability of non-compete agreements. Although this statute primarily addresses non-compete agreements between employers and employees, it can potentially guide the reasonableness of certain restrictive covenants within commercial leases.

How do exclusive use and other leasing restrictive covenants commonly lead to litigation between commercial landlords and tenants?

The following issues commonly lead to litigation:

Ambiguous language: Unclear wording in lease agreements can lead to disputes over the interpretation of exclusive use and restrictive covenants. Parties may disagree on the scope or applicability of a covenant, requiring litigation to resolve the disagreement.
Violation of covenants: Tenants may accuse landlords of breaching exclusive use provisions by leasing space to competing businesses, while landlords may allege that tenants have violated restrictive covenants by engaging in prohibited activities on the leased premises.
Enforceability issues: Conflicts may arise when one party challenges the enforceability of a covenant, arguing that it is unreasonable, overly broad, or contrary to public policy. Courts may need to determine the validity of such covenants under Florida law, such as Florida Statute §542.335.
Modification or termination: Disputes may occur when one party seeks to modify or terminate an exclusive use or restrictive covenant, arguing that the circumstances have changed since the parties signed the lease. The other party may disagree and seek to enforce the original covenant through litigation.

When a set of facts is appropriate for legal intervention, there are many paths a claimant may take. We are value-based attorneys at Jimerson Birr, which means we look at each action with our clients from the point of view of costs and benefits while reducing liability. Then, based on our client’s objectives, we chart a path to seek appropriate remedies.

To determine whether your unique situation may necessitate litigation or another form of specialized advocacy, please contact our office to set up your initial consultation.

How should counsel for commercial landlords draft, review, and negotiate a lease that mitigates litigation risks?

Counsel should consider the following to protect their clients:

Clear and specific language: Draft lease provisions with precise and unambiguous language to define the rights and obligations of both parties. Clearly outline the scope and applicability of exclusive use and restrictive covenants to avoid misunderstandings.
Reasonable covenants: Ensure that exclusive use and restrictive covenants are reasonable in scope and duration, adhering to applicable Florida and federal laws, such as Florida Statute §542.335.
Dispute resolution provisions: Incorporate dispute resolution mechanisms, such as mediation or arbitration, to address potential conflicts arising from exclusive use and restrictive covenants. These methods can provide a faster and more cost-effective alternative to litigation.
Mechanisms for modification or termination: Establish a process for modifying or terminating exclusive use and restrictive covenants in response to changed circumstances or market conditions.
Due diligence: Conduct thorough research to verify the accuracy of information related to the leased property and the parties’ respective businesses. Due diligence often helps identify potential conflicts and inform the drafting of appropriate covenants.
Active negotiation: Engage in open and honest communication during lease negotiations, addressing potential issues and concerns related to exclusive use and restrictive covenants. This collaborative approach can help foster a positive landlord-tenant relationship and reduce the likelihood of litigation.

Please contact our office to set up your initial consultation to see what forms of intellectual property protection may be available for your unique situation.

Frequently Asked Questions

What are the other types of commercial lease restrictive covenants?

Other types of commercial lease restrictive covenants include:

Non-compete clauses: Tenants cannot compete with the landlord or tenants in the same area.
Non-solicitation clauses: Tenants cannot solicit the landlord’s or other tenants’ customers or employees.
Non-assignment clauses: Tenants cannot assign their lease to another party without the landlord’s consent.
Non-subleasing clauses: Tenants cannot sublease to another party without the landlord’s consent.

What are the restrictions on exclusive use and other commercial lease restrictive covenants?

Exclusive use and other commercial lease restrictive covenants are subject to several restrictions, including:

They must be reasonable: Exclusive use and other commercial lease restrictive covenants must be reasonable in scope and duration.
They must be in writing: Exclusive use and other commercial lease restrictive covenants must be in writing to be enforceable.
They must be disclosed to tenants: Exclusive use and other commercial lease restrictive covenants must be disclosed to tenants before they sign the lease.

What are the consequences of violating an exclusive use or another commercial lease restrictive covenant?

The consequences vary depending on the specific terms of the lease. However, some common consequences include the following:

The landlord may be able to terminate the lease.
The landlord may be able to sue the tenant for damages.
The tenant may be required to pay rent for the entire lease term, even if they are not using the property.

Have more questions about how commercial leasing could impact your business?

Crucially, this overview of exclusive use and other leasing restrictive covenants does not begin to cover all the laws implicated by this issue or the factors that may compel the application of such laws. Every case is unique, and the laws can produce different outcomes depending on the individual circumstances.

Jimerson Birr attorneys guide our clients to help make informed decisions while ensuring their rights are respected and protected. Our lawyers are highly trained and experienced in the nuances of the law, so they can accurately interpret statutes and case law and holistically prepare individuals or companies for their legal endeavors. Through this intense personal investment and advocacy, our lawyers will help resolve the issue’s complicated legal problems efficiently and effectively.

Having a Jimerson Birr attorney on your side means securing a team of seasoned, multi-dimensional, cross-functional legal professionals. Whether it is a transaction, an operational issue, a regulatory challenge, or a contested legal predicament that may require court intervention, we remain tireless advocates at every step. Being a value-added law firm means putting the client at the forefront of everything we do. We use our experience to help our clients navigate even the most complex problems and come out the other side triumphant.

If you want to understand your case, the merits of your claim or defense, potential monetary awards, or the amount of exposure you face, you should speak with a qualified Jimerson Birr lawyer. Our experienced team of attorneys is here to help. Call Jimerson Birr at (904) 389-0050 or use the contact form to schedule a consultation.