What's the Use? Court Protects Retail Landlords' Rights to Control Reassigned Leases

Use provisions in shopping center leases are critical to tenant mix and landlord control over their shopping centers. In a recent case, Congress Financial Corp. (Center) v. West Town Center LLC (In re Trak Auto), the Fourth Circuit Court of Appeals upheld the enforceability of shopping center use provisions in a tenant bankruptcy. The case represents an important victory because it enforces the special protections the Bankruptcy Code grants shopping center landlords by requiring that an attempt to assign a shopping center lease requires the assignee to honor use provisions notwithstanding general bankruptcy law allowing the assignment of a lease notwithstanding such restrictive provisions.