USA – LOUISIANA Law and Practice Contributed by: Jeffrey P. Good, Susan M. Tyler, B. Trevor Wilson and Parker Hufft, Jones Walker LLP
While commercial leases are largely unregulated, certain property types may be subject to specific requirements that indirectly affect lease terms, such as hospitality properties, healthcare facilities, indus - trial properties and properties in historic districts. 6.16 Effect of the Tenant’s Insolvency Commercial leases often contain default provisions under which insolvency, receivership or bankruptcy would constitute a default under the lease, but these provisions are generally unenforceable under federal bankruptcy law. The other effects of a tenant’s insol - vency are governed by bankruptcy laws. When a commercial tenant files for bankruptcy, the automatic stay prevents landlords from pursuing eviction or collecting pre-petition rent without court approval. Under the Bankruptcy Code, the tenant (as debtor-in-possession) or bankruptcy trustee has the option to assume or reject the lease within specified timeframes. 6.17 Right to Occupy After Termination or Expiry of a Lease The tenant has no right to occupy the premises after the expiry of the term of the lease. If the landlord allows the tenant to remain in the premises, the lease may be tacitly reconducted under Louisiana law unless other - wise provided in the lease. A tacitly conducted lease of commercial property would be deemed to continue on a month-to-month basis. The landlord should deliver a notice to vacate at the expiry of the lease, unless waived by the tenant in the lease, and take immediate steps to evict the tenant by legal proceedings in order to avoid tacit reconduc - tion. Most commercial leases provide for “holdover” rent in the current market at 150–200% of the regular rental rate in the event a tenant does not vacate the premises at the expiry of the term. 6.18 Right to Assign a Leasehold Interest Most commercial leases restrict a tenant’s right to assign their leasehold interest or sublease the prem - ises without landlord approval. Typical assignment provisions require the landlord’s prior written consent.
Leases commonly include carve-outs permitting certain transfers without landlord consent, such as assignments to affiliated entities under common con - trol, transfers resulting from corporate reorganisations or mergers and acquisitions. The original tenant typically remains liable under the lease following an assignment unless expressly released. 6.19 Right to Terminate a Lease Both the landlord and the tenant have the right to ter - minate the lease in the event of a default by the other party under the terms of a lease. Commercial leases usually require written notice and an opportunity to cure the default before the right to terminate the lease is enforceable. Louisiana courts have complete dis - cretion regarding whether to terminate a lease in the event of default, and lease provisions that give either party the right to terminate a lease without a judicial determination are unenforceable in Louisiana. Beyond default scenarios, sophisticated commercial leases may include other termination rights, such as early termination options, contraction rights or termi - nation upon casualty if restoration cannot be com - Louisiana law does not require that commercial leas - es be recorded, but leases should be recorded to be effective against third parties. Recording a lease or memorandum of lease provides notice to subsequent purchasers and creditors of the tenant’s rights, which is particularly important in ground lease scenarios or for leases with significant tenant investments in improvements. Current recording fees vary by parish but are gen - erally nominal in the context of commercial transac - tions, and in New Orleans documentary transaction taxes apply as detailed in 2.10 Taxes Applicable to a Transaction . Most parties opt to record a memorandum of lease rather than the full lease document to preserve confi - dentiality of sensitive lease terms while still providing public notice. pleted within a specified timeframe. 6.20 Registration Requirements
841 CHAMBERS.COM
Powered by FlippingBook