Saturday, February 19, 2011

Occupancy Costs for Tenants

In addition to rent, a tenant may incur other costs associated with their occupancy of a premises. Such costs may include property maintenance, property insurance and property tax payments. Even under gross leases, tenants may be liable for building related expenses beyond rental payment.
At a minimum, when negotiating a lease document, brokers should make sure that tenants are aware of all the costs associated with the lease. If you are unsure about such costs, ask the owner for an operating budget for the building or simply ask for a breakdown of all costs for which the tenant may be liable. Negotiating a cap or fixing the amount of such costs should be done during lease negotiations.
Think of it the same way you do when purchasing a car. There's the sticker price and then there is the "out the door" price with all the extras.

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