Wednesday, April 6, 2011

The Square Footage Debate

I worked on a large office lease transaction and part of the deal involved determining the exact square footage of the floor that the tenant would be occupying. We, the landlord, hired an architect to measure the space as did the tenant. Both architects were instructed to use the BOMA standard as their basis for measuring the space. As it turns out, the architects both came up with different results. As a resolution, we agreed to hire a third architect to measure the space. That architect, too, came up with a different number. Three professionals using an exact standard of measurement could not agree upon the square footage of a single space. This may sound odd, but it is not unusual. In fact, it is not uncommon for the actual square footage of a building to be different than what is shown on the original building plans. Obtaining an accurate measurement of any space or building can be tricky at best.

With that in mind, all leases have a section where the premises are described. Many people feel compelled to include the square footage as a part of that description when preparing the lease. I urge against that. It opens the door for disputes during the term, such as tenants wanting to renegotiate their rent based upon a discrepancy in the square footage of the space. In other words, in the lease the landlord states that the square footage is 1,000 square feet, but two years into the term the tenant decides to measure the space and comes up with 975 square feet. In addition, the California Court of Appeal has weighed in on this matter in the matter of McClain v. Octagon Plaza. For further information visit http://www.gordonrees.com/publications/viewPublication.cfm?contentID=576 

If it is necessary to provide the square footage in the lease, have an attorney draft language that specifies how the space was measured and by whom, and that the Lessor and Lessee agree upon same.

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