Counsel to Counsel - November 2008 - (Page 16) horizon issues CoNDEMNATIoN CLAuSES IN LEASES Commercial real estate leases typically include boilerplate condemnation clauses covering the rights of lessors and lessees should the state, federal or local government condemn the property, either directly or through inverse/regulatory takings. To the extent they consider it at all, most lessees consider condemnation of a property a remote possibility and fail to protect their rights prior to lease inception. In either a direct or inverse condemnation, the property owner is entitled to just compensation for the taking of the property; but unless stipulated by the lease’s condemnation clause, tenants may be precluded from asserting a claim for just compensation for the taking of their property interests. An effective condemnation clause may provide possible relief. Certain condemnation clauses may preserve a tenant’s right to seek recovery from the government for the value of its property affected by the government’s actions, independent of the property owner’s claim for just compensation for the taking of its property. Other clauses allow tenants to share in the property owner’s award and may be drafted to compensate the tenant for certain damages and other losses that they may not be able to recover against the government. A carefully drafted condemnation clause that stipulates compensation for the taking of tenants’ property may give tenants, and not just property owners, an opportunity to receive just compensation for a taking. Real Estate Real estate counsel must master specialized and technical client concerns to stay on top of the latest market and regulatory developments. New government regulatory, tax and takings policies impact the fundamentals of mortgage lending and property investing, and add to the complexity of domestic and international projects. ©iStockphoto.com/Hsing-Wen Hsu Lewis S. wiener Partner, Litigation Lewis.wiener@sutherland.com Peer Review Rated Sutherland For more information on these lawyers and their firms as well as real estate analysis, please visit www.martindale.com and our Legal Articles database. LexisNexis® Martindale-Hubbell® 16 http://www.martindale.com
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