What does "cross-default" imply in leasing agreements?

The term "cross-default" in leasing agreements refers to the scenario where the default on one lease can trigger a default on another lease. This legal mechanism serves to protect the interests of the lessor by allowing them to enforce terms across multiple leases. For instance, if a lessee fails to meet obligations under one lease agreement, this failure can lead to the lessor taking action against the lessee in relation to other lease agreements that may be in place.

This concept is significant in the context of financial risk management for lessors, as it consolidates their position, ensuring that the lessee maintains compliance across all agreements. It effectively allows lessors to consider the overall portfolio of leases together, rather than individually, enhancing the enforceability of their rights when faced with lessee default.

The other options do not correctly describe the implications of cross-default, such as the idea of re-evaluating lease obligations or a strategy for risk reduction that does not specifically relate to defaults. Additionally, there's no method to increase lease payments associated with cross-default; rather, it's a legal remedy connected to enforceability and compliance across multiple lease agreements.