September 2010 Developments - 30

Legal
Mixing it up without Messing up

Martha S. Nachman

Commercial Leasing in Mixed-Use Projects
T
he number of mixed-use timeshare resorts has grown over the years for good reasons. Owners and guests enjoy the benefits of easily accessible restaurants and shops offering services and products that enhance their resort experience, such as spas and ski and other sports equipment rentals. The owners of commercial businesses benefit from a generally predictable flow of customers in close proximity to their establishments. A balancing act is sometimes required, however, when the different uses are located in the same building and share facilities, such as parking areas, loading docks, and entrances. Developers increasingly have become attuned to the need for a project’s governing documents to address diverse, and sometimes conflicting, uses. In some projects, the master declaration, condominium declaration, or other applicable covenants for the projects specify the types of commercial activities that may be conducted in a commercial unit—in other projects, the permitted uses may be specified in the project’s rules and regulations. Typically, commercial activities are required to be high quality retail operations that sell goods or provide services suitable for the resort community in which the project is located. In addition, certain uses, such as pet stores and resale shops, are frequently prohibited. Regardless of whether general use restrictions are contained in the project’s governing documents, any lease agreement for a commercial unit should include a precise statement as to the use permitted in the leased premises.

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Potential Risks & Protections
Even when the project documents and lease agreement specify the permitted use, problems can arise from the impacts on owners and guests as a result of the manner in which the use is conducted. 30

These impacts may include intrusive noises, vibrations, odors, and light. If bars, restaurants, and establishments with amplified music are permitted, both the rules and regulations and the lease should include appropriate conditions and limitations. These could include limits on the use of amplified sound systems before or after certain hours and the requirement that outdoor lighting, sound-proofing systems, and, for food service establishments, ventilation systems be installed, in accordance with plans reviewed and approved by appropriate consultants to the project’s management. Commercial uses also have the potential to adversely impact common areas. Depending on the physical configuration of the project, entrances, lobbies, parking facilities, and loading and trash collection facilities may be affected. Subject to applicable zoning approvals, the project documents should designate the parking areas that may be used by

commercial patrons and give project management the right to install access devices, post signage, require the display of parking permits, and charge parking fees. Project documents should (a) allow the costs of trash removal and damages resulting from food consumption in common areas to be charged to restaurant tenants, and (b) hold tenants who serve liquor accountable for the behavior of their patrons. Many governing documents allow for the imposition of fines for violations; however, because fines alone may not have the desired effect, the project documents should allow for limitations on late night operations when there are chronic incidences of disruptive or destructive behavior. The project documents should provide that the rights of the tenants are subject and subordinate to the project’s governing documents, as they may be in effect from time to time, and the lease should make violations of the covenants or rules a breach of the lease. Commercial

Developments • September 2010

September 2010 Developments

Table of Contents for the Digital Edition of September 2010 Developments