By Erica Pero
This month I’ve reviewed a TON of leases. Sometimes commercial leases are very (unnecessarily) long and, in the case of one particular lease I read last week, in eight point font. (Not cool, whoever drafted that one!) Landlords seem to be feeling the pinch since the pandemic shifted things a bit. Here are a few sneaky things I’ve noticed landlords trying to include lately.
1 Excessive Administrative Fees.
You’ll likely have to pay your fair share of CAM (common area maintenance) fees. CAM fees normally include things like parking lot maintenance, window cleaning and often include the landlord’s expenses in managing the property – things like the salaries of the staff employed by the landlord. What isn’t cool is when the landlord tacks on an additional “10% management fee” for managing the property management staff! I always try to eliminate a management fee. And if the landlord won’t agree to eliminate it, try to whittle it down as much as possible.
2 Regular Submission of Financial Data.
Often in retail commercial leases, a portion of the rent is based on the tenant’s sales. In such a case, the landlord wants to regularly check out the tenant’s books. If you’re reading this article, however, you are very likely NOT in retail. Sometimes landlords forget to delete this requirement for your leases. Make sure you do not agree to provide the landlord with regular financial data, or you could be in breach of the lease if you don’t.
3 Assignment Costs.
The landlord will often include a provision in the assignment clause that states something like, “Should Tenant want to assign this lease, Tenant will pay Landlord’s costs associated with such assignment.” The problem is that, left unchecked, the landlord’s costs could run pretty high. I always try to eliminate this language, but at the very least, I try to identify a set number in advance, like $1500. That way, the landlord doesn’t have a blank check.
4 Attorney in Fact.
Landlords like to be in control of things. As such, when it comes to things like estoppel and subrogation – two things that require tenants to sign a document – they don’t like to be kept waiting. Often a lease will stipulate that the landlord is the tenant’s “attorney in fact.” This means that if the tenant doesn’t sign the estoppel document in a timely manner, the landlord can sign it on the tenant’s behalf. This is not cool. Often when you explain to the landlord that you’re aware of such things and will sign in a timely manner, they’re willing to delete the attorney in fact language. This comes in handy when, say, the landlord promised to pay for a new HVAC unit but is selling the building and you haven’t seen the new HVAC unit yet.
Erica Pero, an attorney with Pero Law, focuses her practice on health law. She helps healthcare professionals navigate the complexities of running a business in today’s healthcare industry. Pero Law is a lean law firm committed to excellent customer service and exceptional legal representation. perolaw.com