MCLE Self-Study Article: Co-Tenancy Breaches and Remedies: Drafting Guidance For Landlords and Tenants After Grand Prospect Partners
(Check the end of this article for information on how to access one self-study credit.)
By Courtney K. Krause and Danielle S. Gensch
©2015 All Rights Reserved.
In January, the California Fifth Appellate District Court ruled on the enforceability of co-tenancy provisions in commercial leases. Grand Prospect Partners, L.P. v. Ross Dress for Less, Inc.1 was the first time such enforceability had been addressed in a published California appellate court case, with the court holding that the clause itself was enforceable, but some of the stated lease remedies were not. While the case does not establish hard and fast rules concerning co-tenancy provisions, it provides a legal framework for evaluating whether such clauses are unconscionable or create an unreasonable penalty. Both landlords and tenants can use the guidelines provided by the court, along with the unique facts of the case, to draft co-tenancy provisions and post-breach remedies that are likely to withstand judicial scrutiny.