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  • Writer's pictureTanya S Osensky

Hidden Costs in a Commercial Lease

Darla has a small retail shop in a suburban strip mall. When she got her last bill from her landlord, she was incredulous at the amount. She felt like her hair was set on fire.

He was charging her for WHAT?!?!

Before that bill came, she was so pleased that the landlord was finally improving the shopping center. The old, cracked parking lot got resurfaced and the potholes were finally filled in. But now he wanted to charge her and the other tenants for the cost of that!

This is one of those things that might be hidden in a commercial lease, and if you're not careful, you might get stuck with it. Most landlords try to pass along as many of their operating costs as possible to all the tenants in proportion to their leased space.

Some costs it makes sense to pass through: lighting, security, and maintenance of common spaces. It makes sense because the tenants will benefit from these as much as the landlord.

But other categories should be the landlord's cost alone, and should be excluded from the pass-through costs. For example:

  1. Landlord's capital expenses. This includes things like the parking lot.

  2. Structural repairs. Landlord should be responsible for repairing anything outside the leased space, like the roof and common areas.

  3. Landlord's legal and accounting fees.

This list is just scratching the surface. When I review a lease I have a list of over 30 items that I make sure are excluded from the pass-through charges.

It's important to pay careful attention to exactly what is and isn't your obligation as a tenant.

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