This Note argues that a lease deemed rejected under the surrender provision ends the bankrupt sublessor's interest in the lease but does not terminate the rights of a sublessee
. State property law, rather than federal law, should determine the sublessee
's rights when the primary lease is deemed rejected.
"As the sublessee
, you want to have the ability to stay in the space should the sublessor go out of business or move.
The purchasing sublessee
, though, may be able to obtain a new sublease, thereby extending the subleasehold interest, increasing the building's subleasehold value.
* Such portion is to be occupied exclusively by the lessee (or any sublessee
* It must be made pursuant to a lease either by the lessee (or sublessee
) or the lessor;
* The improvement must be made under or pursuant to a lease either by the lessee (or sublessee
) of that portion of the building, or by the lessor of that portion of the building
Some of the elements which would certainly and directly affect the market price agreed upon by a tenant and a sublessee
in such an extraordinary and unusual transaction would be the reasonable cost of moving out the property stored and preparing the space for occupancy by the subtenant.
"Because both the sublessor and sublessee
are publishing companies, the space literally was a perfect fit," said Richard Charkham, managing director at FirstService Williams, who along with president Michael Cohen, represented The Economist Group.
Only at that time would a deduction be allowed for the basis in the right, either through amortization or sale of the interest to the sublessee
. The IRS relied on several cases in which parties have, in form, entered into two separate transactions that resulted in offsetting obligations, but in which the courts collapsed the obligations and recharacterized the two transactions, in substance, as a single transaction (Rogers, 281 F3d 1108 (10th Cir.
Likewise, the sublessee
does not have direct rights against the landlord but rather must look to its sublessor for resolution of any issues.
Substantial capital improvements are or may be made by or for the benefit of the lessee or sublessee
The improvement must be made under (or pursuant to) a lease, either by the lessee (or sublessee
) or lessor of that portion of the building.