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My rights as a commercial tenant when a landlord brings in another tenant that will directly affect my business

Los Angeles, CA |

I don't think I had a non compete clause in the lease agreement. What is my option?

Attorney Answers 4

Posted

The clause you are looking for in the lease is not a non-compete clause, but rather, an exclusive use clause. This clause provides that you have the exclusive rights to operate, sell or offer certain products or services in the building, shopping center or mall. For example, a card and gift store may have an exclusive use provision in its lease stating they can be the only store allowed to sell cards and gifts. If you do not have that exclusive use specified in your lease, you do not have the rights. This is typically a negotiated point with a landlord and not something typically the landlord provides freely in the lease. I just finished reviewing a shopping center lease for a client in which the grocery store anchor tenant required that all other tenants in the center could not have patrons stay for longer than 60 minutes. Since my client was a sit-down restaurant, this was quite problematic.

This response does not create an attorney-client relationship and is not intended to provide legal advice for your specific situation.

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Posted

without the non-compete clause you really can't do much. But, you should be sure that there is none before giving up.

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Posted

Probably nothing if the lease does not contain a non competiton clase.

In California, commercial leases in shopping centers commonly specify the business the lessee is to engage in, and will prohibit the lessee from engaging in any other business. (See Bostrom v. County of San Bernardino (1995) 35 Cal. App. 4th 1654, 1670.)

The Cartwright Act, California Business & Professions Code section 16700 et seq., prohibits a lease from containing a condition the lessee shall not deal with a competitor where the effect of such lease or such condition may be to substantially lessen competition or tend to create a monopoly.

However, as the court indicated in Roth v. Rhodes (1994) 25 Cal.App.4th 530, the statute appears to be limited to "chattel leases", and no similar California statute relating to "real property leases" exists.

Accordingly, Section 16727 of the Business and Professions Code does not necessarily prohibit non-competition clauses in commercial leases. The landlord in a shopping center should be able to restrict the sales of certain categories of goods amongst tenants in the same shopping center by providing specifically worded restrictions within the provisions of the commercial lease.

The information presented here is general in nature and is not intended, nor should be construed, as legal advice. This posting does not create any attorney-client relationship with the author (who is only admitted to practice law in the State of California). For specific advice about your particular situation, consult your own attorney.

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Posted

You should review your lease to see if you have a non-compete clause. If you do not find one you may not be able to do anything to prevent your landlord from renting to an competing business.

The opinion provided is for informational purposes only and does not constitute legal advice.

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