My lease states I can only operate on these premises as a gift and apparel store. My store is within a strip mall which is owned by the same person. The tanning bed company next door to me has now added gifts, purses etc (just like mine). After discussing this with my landlord he said I should talk to the tenant. This tenant is taking business away from me. Do I have grounds to walk away from my lease?
Generally, you do not have the right to terminate your lease simply because a nearby tenant happens to be encroaching on your business. Unless the terms of the lease state that the landlord will not rent space within the strip mall to a competing business, the landlord's sole obligation was to provide you with the space in good condition and to provide you with the freedom to run your business as you had planned. If he's doing that, he's met his obligations. Your obligations are to pay rent through the end of the lease term. The landlord cannot be held responsible for the fact that the tanning bed company has chosen to expand its product line. That said, if there were anything in the other tenant's lease that prohibited the selling of gifts, or if the landlord somehow encouraged the tanning salon to interfere with your customers (not easy to prove), you might have a cause of action, depending on the laws of your state. Best to consult with a real estate attorney who is familiar with strip mall leases to see whether it's worth the fight. If you don't have much time left on your lease, it might be more cost-effective to stick it out to the end and find another space than to get into a battle over the lease.
Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.