A co-location clause is usually a hot-traded object in a retail lease agreement. Landlords don`t like roommate rules because they can`t control the actions of other tenants or residents of the mall. They believe that some degree of vacancy is inevitable and that their income from the mall can be heavily affected by a roommate clause. Like a lease, you can use a lease agreement to define the responsibilities of each roommate, including payment of incidentals, repairs, rents, and other expenses. A co-location agreement can also be used to set the house rules that everyone must follow so that each roommate knows what to expect. A copy of all written agreements with the lessor, including the lease, should be attached to this document. The main point is that all tenants have some kind of lease with the landlord. The exact terms and situations that led to these agreements may vary from property to property, but none of them exist without any kind of legal liability for you and your property. Similarly, all tenants have the same rental rights that you must respect. In a rental relationship, each tenant signs the lease and all tenants are also responsible for paying the rent and maintaining the property. Whether a tenant benefits from a co-location clause depends largely on their bargaining power.
Landlords are looking for national tenants and large regional tenants for their notoriety, ability to pay higher rents and endurance. They are also desirable because of their pulling force and their ability to improve the public profile of a shopping mall. These tenants are in a better negotiating position than small tenants to get protection against co-tenancy. Tenants are usually anchor tenants in a shopping mall. It is the popular department stores that attract the increased traffic that spreads to other stores in the same place. In times of economic stress, when some retailers are forced to close stores to save costs, owners typically lose a lot of revenue. The exercise of co-location clauses further exacerbates the loss of revenue, with the remaining tenants demanding a reduction in rent, the stress of which could ultimately lead to bankruptcy. A co-location clause in retail lease agreements allows tenants to reduce their rent when primary tenants or a number of tenants leave the retail area. A large or large tenant is a great pole of attraction for traffic, especially in shopping malls, and is often one of the main reasons why a tenant chooses a particular shopping mall. A co-location clause offers the tenant some form of protection in the form of reduced rent to compensate for the loss of traffic. In case of co-location, the amount of the loan is generally divided equally among the tenants. If one tenant stops paying rent, it can become a heavy burden for the other tenant, since he is then held responsible for the total amount of rent..