USA – LOUISIANA Law and Practice Contributed by: Jeffrey P. Good, Susan M. Tyler and B. Trevor Wilson, 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 facili - ties, industrial properties and properties in his - toric districts. 6.16 Effect of the Tenant’s Insolvency Commercial leases often contain default provi - sions under which insolvency, receivership or bankruptcy would constitute a default under the lease, but these provisions are generally unen - forceable under federal bankruptcy law. The oth - er effects of a tenant’s insolvency are governed by bankruptcy laws. When a commercial tenant files for bankrupt - cy, 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 prem - ises 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 otherwise provided in the lease. A tacitly conducted lease of com - mercial 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 reconduction. 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 premises without landlord approval. Typi - cal 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 com - mon control, 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 terminate 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. Loui - siana courts have complete discretion regard - ing whether to terminate a lease in the event of default, and lease provisions that give either par - ty the right to terminate a lease without a judicial determination are unenforceable in Louisiana. Beyond default scenarios, sophisticated com - mercial leases may include other termination rights, such as early termination options, con - traction rights, or termination upon casualty if restoration cannot be completed within a speci - fied timeframe.
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