North Carolina shopping centers and mall owners rely on the success of the business owners who are tenants in their commercial properties. When those businesses falter, it can mean missed rent payments and broken leases. On the other hand, retail establishments depend on mall owners to do whatever they can to attract and keep other businesses as tenants in order to attract more customers to the mall. When a mall or a business begins to struggle, they may be quick to place the blame on each other. In such a tenuous retail economy, this scenario seems to be more and more common.
One example of this is taking place in a downtown mall in another state. Victoria’s Secret, a staple in many malls, allegedly abandoned its storefront with years to go on its long term lease, refusing to pay rent. While the landlord has filed a lawsuit seeking more than $30 million in damages, Victoria’s Secret claims the landlord was the one who breached the contract.
Read the fine print
Victoria’s Secret signed a tenant agreement that included an important clause for the store’s protection. If the landlord was unable to keep at least 75% of the mall stores open and operating for more than one year, Victoria’s Secret had the option to cancel its lease. With the recent world events that resulted in lockdowns for health and safety reasons, many stores nationwide closed at least temporarily.
Nevertheless, the mall owners insist they can prove the mall was not in breach of the occupancy clause. They believe Victoria’s Secret may be taking advantage of this situation to break its lease since the company itself has been trying for years to reorganize to remain viable. A court will soon decide which party breached the contract.