Section 13 Condemnation

• Library: Real Estate Leasing and Landlord-Tenant Actions and Remedies 2011

Provisions addressing the rights of the parties if some or all of the leased premises are taken by condemnation proceedings should be contained in all leases. When improved properties are leased to tenants, these provisions typically provide that all awards made in condemnation are paid to the landlord and that the tenant is not entitled to any portion of the award, excepting only awards for taking fixtures that the tenant has the right to remove and, in some cases, specific awards made to tenants to pay relocation expenses. These provisions are based on the proposition that the tenant has added nothing of value to the property and that the tenant, therefore, is not entitled to any part of the award. To provide otherwise would give the tenant a speculative value in the leasehold for which the tenant has paid no consideration. Failure to exclude the tenant from condemnation awards in these cases may have a serious effect on the landlord’s ability to obtain financing secured by the property. Tenants should take a hard look at...