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Continuous Occupancy Clause

By Contributor on June 21, 2019

A continuous occupancy clause is a provision in a lease agreement in which the landlord requires the tenant to stay open and conduct normal business throughout the period of the tenancy.

This is most commonly found in commercial real estate, especially in the contract terms of anchor tenants.

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As anchor tenants are very likely to receive very favorable rental rates and terms, the least the landlord would expect from them is to see through the total period as agreed in the tenancy agreement.

This is because anchor tenants play a critical role in bringing crowds and human traffic to malls. This in turn helps to sustain the business of smaller retailers.

Sometimes, a continuous operations clause is added into the contract on top of the continuous occupancy clause.

The latter differs slightly from the former.

A continuous operations clause would state the minimum required operating hours in which the tenant has to be open. This can be a minimum amount of hours in each week, a specified time period for each day, or even special timings that they have to be operating.

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It is implied that during these operating hours that the store would be adequately staffed and carrying adequate inventory.