Exclusive Use Clause

Practical Law Glossary Item 3-508-3526 (Approx. 3 pages)

Glossary

Exclusive Use Clause

In the context of retail leasing, a negotiated right that protects shopping center tenants from competitors opening and operating their retail stores either:

In the tenant's shopping center.
Within a defined radius from the tenant's store.

A lease with an exclusive use clause should have a memorandum of lease recorded to put all third-parties on notice of the terms of the tenant's exclusive use clause.

Generally, the more focused the retail business of a particular tenant, the more protection an exclusive use clause can provide for that tenant.

A tenant negotiating its exclusive use clause should take into account several factors, including:

Leases that have priority over the tenant's lease and have either:
- conflicting use clauses; or
- broad use clauses.
The way the tenant's competitors are defined.
Whether the exclusive use clause is exclusive to the tenant or will it remain in effect if the tenant assigns its lease or subleases the premises.
Whether the exclusive use clause will remain in effect after the initial lease term.
The description of the radius area affected by the exclusive use clause and whether it includes:
- property adjacent to the shopping center that is owned by landlord or any affiliate of landlord;
- any current and future development phases of the shopping center; and
- binding language for the landlord's successors and assigns.

For more information on exclusive clauses, see Practice Note, Retail Lease: Key Provisions: Exclusive Use Clause.

Exclusive Use Clause | Practical Law