Anyone have a clause like this in their hangar lease?

alpinelakespilot2000 · #1 02-02-2012, 02:37 PM

Am trying to buy a fellow EAA member's hangar. Picked up the new lease agreement offered by the county. The county is the "lessor." It includes this clause:

22. MODIFICATIONS OR TERMINATION: Lessee and Lessor agree that Lessor may, at Lessor's sole discretion, modify the terms of this lease in whole or in part, including but not limited to any term or condition of this lease, including cancelling the unexpired portion of this lease and re-letting the property to another tenant, in the event that any regulation governing airports or county property is amended in a way that impacts the Lessor's ability to lease, use, control, protect, or maintain the Property. For the purpose of this section, "regulation" is defined to include, but is not limited to: case law interpreting any rule or regulation; any federal rules and regulations, including Federal Aviation Administration rules and regulations; state rules and regulations; and local rules, regulations, and ordinances.

In the event that Lessor shall elect to modify or terminate this lease, Lessor shall do so only upon one hundred twenty (120) days written notice, notifying Lessee, at Lessee's address of record, that the lease to which this applied is being so modified or terminated.

Am I right to be concerned about plunking down a lot of money for a hangar that, if I read this right, could be stripped away if the county decided it wanted to plant more grass?

AltonD · #2 02-02-2012, 02:40 PM

"in the event that any regulation governing airports or county property is amended in a way that impacts the Lessor's ability to lease, use, control, protect, or maintain the Property. "

That is what I take out of it There are plenty lawyers on here to answer this.

Lemmingman · #3 02-02-2012, 02:58 PM

Will they accept a red line modification for consideration?

Basically if the airport commission or management organization loses control of the airport (bankruptcy, closing the airport, etc...) they can cancel the lease and re-let it to someone else. Its kind of a stupid clause in some regard. Seems the me the right of the Lessor to evict the Lessee is always a possibility regardless of this section. If the Lessor cant "lease, use, control, protect, or maintain the Property." then it sounds like a moot point.

You might want to ague the part about "any term or condition of this lease" and trim it down to the ones you dont want them modifying. Get them to add another 60-day on the notification, too. It will give you 6-months to find new digs.

Flybuddy2 · #4 02-02-2012, 03:28 PM

I think it's intent was reasonable based on possible federal or state reg changes that they might have to adapt to. HOWEVER, the way it is written opens the door for the county themselves to propose regulation that could move you out.

az_gila · #5 02-02-2012, 03:46 PM

Since you said "buy the hangar", I presume this is a ground lease for your building and not a lease of a county (or city) owned building.

alpinelakespilot2000 · #6 02-02-2012, 04:02 PM

Quote:

Originally Posted by az_gila

Since you said "buy the hangar", I presume this is a ground lease for your building and not a lease of a county (or city) owned building.

Correct. I would own the building but lease the land.

I would pretty much have to destroy the building to take it with me, so if the county ever invoked this clause, my entire investment is pretty much gone. Hence my concern.

Scott Hersha · #7 02-02-2012, 04:04 PM

It doesn't sound fair to me. The lessor is protecting themselves and allowing themselves to break the land lease for possibly reasons you haven't even thought of - with no protection for your investment. Check out North Little Rock airport. Hangar owners there went through some turmoil when the City of North Little Rock decided to take over ownership of hangars that were owned by individuals. I'm not sure what the outcome was, but I believe their lease agreement allowed them to keep any improvements made to the leased land - like their hangars. The city wanted to take ownership of the buildings and then rent them back to the current owners! I have a similar lease agreement here in Ohio, and if they tried to do that here, I'm taking my hangar(s) with me. They'll be left with a piece of property with a slab on it.

Lionclaw · #8 02-02-2012, 04:12 PM

Quote:

Originally Posted by Scott Hersha

It doesn't sound fair to me. The lessor is protecting themselves and allowing themselves to break the land lease for possibly reasons you haven't even thought of - with no protection for your investment. Check out North Little Rock airport. Hangar owners there went through some turmoil when the City of North Little Rock decided to take over ownership of hangars that were owned by individuals. I'm not sure what the outcome was, but I believe their lease agreement allowed them to keep any improvements made to the leased land - like their hangars. The city wanted to take ownership of the buildings and then rent them back to the current owners! I have a similar lease agreement here in Ohio, and if they tried to do that here, I'm taking my hangar(s) with me. They'll be left with a piece of property with a slab on it.

I wouldn't leave the slab (in one piece). Rent a jack hammer and break it up before you leave.

FresnoR · #9 02-02-2012, 04:42 PM

As an airport manager for a city, we have similar language in our leases. Often it refers to the airport shutting down, losing funding, nation emergency and federal takeover. You lease probably also has language that you will have to return the land to clean and clear dirt upon the experation date at the lessors decision.

Depending on the governing agency (County), you will probably have a very difficult time changing that, as it will prob have to go to the board of supervisors, council and/or county attorneys office for approval or modification.

Realistically, you will prob be ok, because you have the power of PR and the media against elected officials. Politics do not like to look like they are picking off the little guy, and the news likes to report that.

Just food for thought

FresnoR · #10 02-02-2012, 04:56 PM

Quote:

Originally Posted by Scott Hersha

The city wanted to take ownership of the buildings and then rent them back to the current owners!

This is a very common way smaller airports are built up (at the end of the lease term of course). Oftentimes the governing bodies do not have the capital to build hangars, so they offer a long term ground lease, have a developer build and rent out the new hangars, and take ownership of the hangars afterwards. By this time the hangars will be 25-30 years old and should be fully depreciated. Of course, a maintenance nightmare too.

Small airports rarely make a lot money, and the FAA does not provide funding for operating costs, so without landing fees, renting the real estate is helps them pay for the utility and maintenance costs.