In a retail leasing context, a clause that is usually heavily negotiated and provides for either, or each, of the following:

The co-tenancy clause protects a tenant, since it ensures that the shopping center where it operates remains operational, busy and able to attract consumer traffic to benefit the tenant's sales. A tenant's remedies for a co-tenancy breach can include a reduction of rent or even lease termination.

However, a landlord that agrees to include a co-tenancy clause in its lease creates a certain amount of risk for itself. A co-tenancy clause is most often contingent on the proper actions by third-party tenants in the shopping center that do not always adhere without legal action to the terms of their leases or the demands of the landlord. A landlord should ensure that the co-tenancy clause is properly drafted to minimize as much of its risk as possible.

For more information on co-tenancy clauses, see Practice Note, Retail Lease: Key Provisions: Co-Tenancy Clause.