Ground Leases:

• Land value, percentage rate of return, and/or economic ground rent for renewal term
• Zoning classifications, allowable building envelope, and floor area ratios
• Rent to be set based on current use as improved or on highest and best use if vacant.
• Effective date of rent determination
• Consideration or lack of consideration of other ground lease terms
• Repairs and maintenance of improvements
• Ground lease assignments

Space Leases:

• Market rent for renewal term.
• Effective date of renewal rent determination
• Space measurement disagreements: gross, rentable, usable
• Operating expense definition
• Base operating expense definition
• Measurement mechanisms for property tax or operating expenses
• Apportionment of property taxes and operating expenses between landlord and tenant
• Allocating responsibility for repairs and maintenance
• Quiet enjoyment of premises
• Alleged lease technical or substantive lease defaults
• Electricity charges
• Insurance
• Negotiations for space expansions or early terminations
• Assignment and subletting provisions
• Rights of first offer or first refusal
• Property management fees

Dispute Resolution Planning for Leases

Landlords and tenants such as shopping center owners, retail chains, office tenants and landlords, REITS, real estate pension fund advisors, multi-location commercial banks and other entities with a large number of locations who are parties to a significant volume of leases (ground and space) would likely benefit by initiating a dispute resolution planning function to resolve future controversies about rentals for future renewal periods, allocation of operating expenses between landlord and tenant, and other landlord/tenant disputes.

The goal of enhancing net operating income from individual real estate assets can be supported by such an initiative. Asset managers should take the following steps:

1. Select dispute resolution advisors who will support your efforts at every stage of each dispute. Ideally, the team would include a lawyer and a real estate dispute resolution expert.
2. Review contractual agreements linked to each real estate asset in your property portfolio to determine which agreements are subject to formal dispute resolution procedures that will trigger negotiations and/or one or more other dispute resolution methods.
3. Develop a computer based system of early warning dates for important subsequent Arbitration/ADR trigger dates.
4. Considerably in advance of a dispute resolution deadline investigate and analyze the core issues in arbitration or other dispute resolution processes.
5. Develop strategies and tactics for effectively resolving each dispute.
6. Select the key professionals to protect your interests in each dispute resolution event including lawyers, fact and expert witnesses, and, possibly negotiators and/or party-appointed arbitrators.
7. Manage the intensive preparation required for a specific dispute resolution challenge.
8. Participate in and/or monitor the entire dispute resolution process for each real estate asset.
9. Evaluate each dispute resolution event and the results that flow from it to learn how to further enhance your bottom-line results for individual properties in future disputes.
10. Based on results over time possibly modify dispute resolution language in future lease agreements.