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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

  • work Practice Area

    Real Property - Transactions

Date & Time
  • event Date

    Monday, April 25, 2022

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE course will discuss best practices for landlords to draft enforceable accelerated rent clauses in commercial leases. The program will also discuss potential defenses to these claims by the tenant's counsel when the strict criteria for application are not met.

Faculty

John G. Kelly
Shareholder
Bean Kinney & Korman, PC

Mr. Kelly focuses his practice on general corporate law and real property law, including commercial real estate leasing, financing and acquisitions, and business mergers and acquisitions. With respect to leasing, he represents both landlords and tenants nationwide in substantial office, retail, industrial and government leasing transactions. Mr. Kelly serves on the Board of Editors of Commercial Leasing Law & Strategy, a national publication. He has also served as a featured guest on real estate leasing topics on Commercial Real Estate Radio. Mr. Kelly’s lending experience includes representing both lenders and borrowers in complex financial transactions secured by real or personal property, including the negotiation of the initial loan documents and advising with respect to workout strategies and foreclosures.

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Samuel J. Banks
Shareholder
Bean Kinney & Korman, PC

Mr. Banks practices in the areas of commercial litigation, employment law, and government contracts. He has helped many businesses find successful solutions to various legal disputes including ownership disputes, vendor disputes, employment disputes, and real estate and construction disputes. Prior to becoming an attorney, Mr. Banks worked as an accountant and a financial analyst for seven years.

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Description

Most commercial leases include provisions that provide accelerated rent to be paid by the tenant to the landlord in the event of a default. Although such arrangements may be standard, the ability to enforce them is often tricky if the contract terms do not abide by the most typical restrictions imposed by law.

Counsel must ensure the contract criteria for accelerated rent meet all required factors, typically an explicit declaration in the lease that the breach would create damages difficult or impossible to estimate when executing the contract. Further, counsel must communicate that parties intend these provisions to serve as damages and not penalties. Finally, the damages must be a reasonable estimate of the probable loss.

Drafting enforceable language in these cases requires skill and understanding of what courts will need to move forward. A strong defense of these claims may limit the majority of a tenant's potential liability in the event of a default. Therefore, landlords' and tenants' counsel must understand and review these provisions.

Listen as our authoritative panel of commercial real estate practitioners discusses drafting and negotiating accelerated rent provisions that meet criteria for enforcement and provides practical tips regarding pre-commencement improvement, build-out, and functional maintenance and repair, as well as indemnification provisions to allocate risk.

Outline

  1. Criteria for enforcement
    1. Difficult or impossible to estimate damages at time lease is signed
    2. Damages vs. penalty
    3. Reasonable pre-estimate of probable loss
  2. Defenses to enforcement
  3. Practical tips for drafting

Benefits

The panel will review these and other essential matters:

  • What are the elements of an enforceable accelerated rent clause?
  • How can a tenant best defend against a claim for accelerated rent, and what grounds exist to negotiate these clauses?
  • What are best practices for drafting accelerated rent provisions?