Most Canadians are familiar with many of California's
notable attributes – from Hollywood, to Silicon Valley, giant
redwoods, the former "Governator", Napa Valley wines and
Alcatraz. However, outside of certain high-profile criminal cases
we rarely hear about California court decisions. Nevertheless,
landlords and tenants should take note of a recent California Court
of Appeal decision dealing with an issue that has not received much
attention in Canada: Are co-tenancy clauses in commercial leases
enforceable?
As a starting point, a co-tenancy clause usually gives a tenant
the right to terminate its lease and/or pay reduced rent if a
prescribed percentage of the shopping centre becomes vacant, or if
certain anchor tenant(s) fails to open or leaves the centre. The
clause comes in two forms. An opening co-tenancy clause requires
that one or more specific tenants, a certain percentage of the
centre, or a certain number of tenants must be open and operating
prior to the
