What is Co-Tenancy Clause?
A retail lease provision that conditions a tenant's rent or occupancy obligations on the presence of specified co-tenants or minimum occupancy levels.
Definition
A co-tenancy clause is a provision in a retail lease that ties a tenant's obligations to the presence of other tenants in the property. Typical co-tenancy clauses require that a specified anchor tenant be open and operating, or that a minimum percentage of the property be leased and occupied. If the co-tenancy condition fails, the tenant may have the right to pay reduced rent (often percentage rent only), terminate the lease, or cease operations while maintaining the lease. Co-tenancy failures affect CAM reconciliation because reduced occupancy changes the denominator for pro-rata share calculations, and tenants paying reduced rent may have corresponding CAM adjustments. Property controllers must monitor co-tenancy conditions and adjust billing configurations when triggers are activated.
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