If you are a shopping center developer here in Orange County, one tool at your disposal for regulating usage of your available space are covenants, conditions and restrictions clauses, known collectively as “CC&Rs.”
CC&Rs can also dictate how a business can display signs to advertise the business. Maybe the shopping center is located in an historic district where garish neon lights would detract from the overall ambiance of the area. Inserting a restriction on signage or other features can address this issue before it becomes a real headache. Learning how to use CC&Rs to your advantage can save you time and hassles later.
Other reasons why you might want to use CC&Rs
As the owner of the property, you do have a right to determine just what types of business activity will take place on the premises. For instance, suppose that your insurance premiums will rise significantly if you allow a tavern or bar to operate there. But you also have a franchise that sells alcoholic beverages interested in renting a space in your development. You can insert a rental clause that states the franchise’s food-to-alcohol ratio has to be a specific number.
To cut down on the amount of trash that gets strewn on the property, you might also want to have maintenance clauses stating that all dumpsters must be secured behind a fenced enclosure that’s kept locked. After all, new business clients would take one look at a littered and messy shopping center and choose immediately to look elsewhere to hang out their shingles.
Covenants can dictate noise levels as well
Suppose a new-age spa wants to rent space in your development. But the popular gym next door plays motivational music with thumping bass that makes the walls of the tranquil spa shudder when clients are trying to relax with a massage. Without a covenant restricting the noise levels that can emanate from a business, you could quickly lose your spa renter and be unable to fill their space.
Along with the CC&Rs themselves, you will also need to have protocols in place for the enforcement of same. Most begin with a written warning that escalates to a fine and finally, to eviction and subsequent legal action against the violator. In fact, in order for property owners to seek legal redress for alleged violations, most courts require there be a binding contract between the property owner and the business renting space in the development.
Exemptions may be possible
Few facets of the law are black and white, which is why it might be possible for your business tenant to seek a variance from the covenant you impose. One example might be that the national franchise’s iconic sign is a half-foot larger than the signage permitted under the covenant. In order to land this profitable tenant, you might need to grant them a variance to accommodate their trademarked sign.
Getting it right is good business
The best way to ensure that your CC&Rs don’t have too much wiggle room is to have your Orange County real estate attorney draft the contracts that will protect your interests.