Hot Topics from the ICSC 2014 Law Conference: Some Things Old and Some Things New

Nov 03 2014

The ICSC U.S. Law Conference celebrated its 44th anniversary this year. The content of the seminars, workshops, round tables and other forums did not disappoint. Each year following the conference we like to summarize some of the hot topics addressed at the conference. There were a number of topics that received attention during multiple sessions and many of the topics were not new issues but rather new twists on the old standby issues. The following is a summary of some of the issues that received attention at multiple sessions.

Are "uncontrollable expenses" a term of art with a generally accepted meaning?
Some of the largest crowds with the most lively debates ensue anytime CAM or operating expenses is the subject matter. While landlords and tenants still squabble over items that should be excluded from CAM, the merits of fixed CAM, or whether an audit clause should include a confidentiality provision, it appears that the new issue du jour is how to define "uncontrollable expenses" in addressing caps. The issue arises when the parties negotiate a cap on CAM increases each year. However, landlords will often insist that certain "uncontrollable costs" be excluded from the cap thereby allowing these expenses to be passed through at their actual cost. Rarely is the term defined by the parties until the lawyers begin to negotiate the document. While there are some expenses that most landlord and tenant attorneys will agree are outside of landlord's control, such as the cost of snow and ice removal, there are many others that are not so clear. For example, should security costs be included in the cap? What about insurance? These are examples of costs that are negotiable by landlords but can be subject to significant price adjustments from year to year due to circumstances outside of landlord's control.

Was that insurance clause drafted during the Reagan administration?
Does the insurance provision in a lease still reference "All Risk Property" coverage? How about "comprehensive general liability" coverage? Hopefully not, as these terms have not been used since the 1980s. Use of the term "perils" instead of "fire or casualty" is also prudent. Another topic of great debate was landlords' desire to require that tenants provide copies of insurance policies since certificates of insurance are non-binding.

The economy is improving so is it time to makeover that mall?
Shopping Center makeovers can come in different forms such as adding a new anchor tenant, making the property more energy efficient, or just generally upgrading the center's condition. While a makeover would seem to be a win for both landlords and tenants, these projects are not without their potential hurdles. Existing tenants are going to be concerned about the effect of construction on its operations, parking, signage, and visibility. Landlords must conduct careful due diligence of the Center's leases to ensure that an existing tenant's lease is not breached because of the construction. For more information on preserving your visibility, access, and use during construction, see our recent Legal Update on these issues.

Is that a funeral home in your Shopping Center?
Shopping Center owners continue to look for ways to bring new foot traffic to their centers and non-traditional users of retail space have been pursuing the opportunity with greater frequency. While health care services have been referenced and discussed as the most frequent "non-traditional" users of retail space over the last few years, there are other examples that many would not normally consider to be an ideal retail tenant. An example of a non-traditional user includes funeral homes for the display of caskets and markers. Others could include churches or construction companies such as window installers. These businesses are looking for foot traffic and could possibly draw new foot traffic to the Center. The expectation is that non-traditional uses of retail space will continue to increase over time.

von Briesen & Roper Legal Update is a periodic publication of von Briesen & Roper, s.c. It is intended for general information purposes for the community and highlights recent changes and developments in the legal area. This publication does not constitute legal advice, and the reader should consult legal counsel to determine how this information applies to any specific situation.