September-October 2022 - 34

LEGAL MATTERS
AUTHORS Alison Squiccimarro and Amber Eckart
What To Expect as Your Airport
Lease Nears the End of Its Term
IT IS not uncommon for airport property
leases to run for 30 or more years.
When entering into a 30-year lease, it
may feel like the tenant has an eternity
before having to consider what happens
at the end of the lease. As the old adage
goes, " time flies when you are having
fun. " Therefore, tenants should consider
what happens at the expiration of the
lease when they negotiate and before
executing. Whether you are a tenant
negotiating a long-term lease or a tenant
nearing the expiration of their term, this
article provides a checklist for things that
you should be considering.
Does the lease provide any options for extension?
Often, airport leases have an initial term that begins either
when the lease is fully signed or on another agreed upon
date. Leases may be executed months or years before the
term commences. The lease term is defined by the number
of months or years and provides an expiration date. A
lease may also provide an option, allowing the lease to be
extended for one or more periods of time.
Assuming your lease has an option, what is the process for
exercising that option?
Options usually include notice provisions that require the
tenant to notify the landlord that it is exercising the option.
It is very important that tenants carefully follow the notice
requirements for exercising their option. The requirements
may include: a specific time to exercise the option, the
notice to be in writing and sent to the airport/landlord at
a specific address and may even require a specific method
of delivery. Make sure you calendar the deadline to exercise
your option and don't assume that an email to your point of
contact will suffice. The option needs to be timely and in
the manner specified in the lease. Don't be surprised that
34 \ AIRPORT BUSINESS / SEPTEMBER/OCTOBER 2022
you agreed to make the notification in a window between
12-24 months before the expiration and that you agreed to
provide the notice to a specified address by certified mail.
Once you follow the process and exercise the option in
the manner specified, don't hesitate to confirm that your
landlord has received same and acknowledged receipt. You
don't want to find out it was lost in the mail when your
landlord asks to show your leasehold to a prospective tenant
six months before the expiration of your lease.
Are there any impediments to exercising your option?
Options may be contingent on the tenant not being in
default under the lease. Thus, if you are in technical default
under your lease, make sure that you have any default cured
before you exercise your option.
An option may also be contingent on the tenant having
made certain capital improvements during the initial term
or an agreement to make additional capital improvements
during the option period. Thus, a tenant should make
sure that they have completed the requirements for capital
improvements during the initial term and also be prepared
and have a plan to make the improvements that will be
required during the option period.
Another possible impediment is that your option may
not actually be an option but rather an agreement to agree
in the future, which may not be an enforceable option. The
option provisions of the lease should clearly state how the
200073753 | JOZEF MICIC | DREAMSTIME
September-October 2022

Table of Contents for the Digital Edition of September-October 2022
