A. First, look at the actual wording of the lease (for example, is the lease structured for motels and must the assessment of "market" take into account market rent for motels?)
Generally, a market rent review is based on what a willing, but not anxious, tenant is prepared to pay to lease the premises.
In assessing the market rent, valuers will take into account rent paid for comparable premises (in a similar region, location, a similar size and used for similar purposes).
A review may also take into account the term of the lease and length of time between each review.
The underlying land's value is a major factor in assessing the market value of the leasehold interest. But unless the lease specifically requires it, the landlord is not obliged to determine rent based on "motel industry standards". The landlord is only required to consider what he/she could get from the market if he/she were to lease these premises to someone else.
Whether you can require the landlord to decrease the rent depends largely on whether your lease contains a "ratchet" provision.
Most commercial leases contain a rent "ratchet" providing that the rent, upon review, can never be less than either the rent at the commencement of a lease (soft ratchet), or rent determined on the last review (hard ratchet).
It would be surprising if your lease did not have a rent ratchet. If it does, the landlord has no obligation to lower your rent - even if the market value has fallen.
Q. If an "agreement for sale and purchase of real estate" has a condition stating that the agreement remains confidential between the vendor and the purchaser, does this condition prohibit the terms of the agreement and the purchase price from being disclosed by third parties (for example, valuers repeating or printing the purchase price in valuations for banks when assessing properties in the area)?
Would this condition void the agreement if the terms were blatantly made public? What rights or remedies do the vendor or purchaser have?
A. A confidentiality clause in an agreement for sale and purchase of real estate is binding only on the parties to the agreement (the vendor and the purchaser).
A confidentiality clause may allow a party to disclose the terms of the agreement to certain people such as lawyers and valuers.
But if the confidentiality clause does not allow disclosure to a valuer, and the purchaser appoints a valuer, then the confidentiality clause will be binding on the valuer only if the valuer has agreed to keep the agreement confidential.
In order to prevent the contents of the agreement being disclosed by the valuer, the purchaser should get the valuer to sign a separate confidentiality agreement.
If the valuer has agreed to keep the agreement confidential but then discloses its contents to others, then the purchaser can sue the valuer for breaching confidentiality.
If the confidentiality clause does not allow the purchaser to disclose the contents of the sale agreement to the valuer, then the purchaser will have breached a term of the agreement and the vendor will be able to claim damages from the purchaser, regardless of any confidentiality agreement between purchaser and valuer.
But it is hard to quantify such a breach, and many people regard confidentiality clauses as obligations of honour rather than legally enforceable obligations.
The vendor will be able to terminate the sale agreement only if the confidentiality clause is considered to be an essential term of the agreement.
* Send us a commercial property question
