Yawn Yawn, yea I get it, why are we talking about operating fees again?

Yawn Yawn, yea I get it, why are we talking about operating fees again?

In our last post, we spoke about the importance of ensuring that you’re not being overcharged for operating fees in your lease. Why are we still talking about them?  Here’s why.  If you or your attorney didn’t address what can and can’t be charged in operating fees when you reviewed and signed your lease, you may be headed for trouble.

True story:  I had a new client who was at the end of a 5-year lease. The landlord had written the lease in such a way that he could charge for all improvements to the building—not just the ones that benefitted the tenant in question. In the last year of the lease, the landlord decided to replace the roof of the building.  My client had occupied 80% of the building and while he was at the end of his lease, he got stuck paying for the roof.

Another potential cause for concern is if the building in which you’re leasing space needs to be updated for the Americans with Disabilities Act. Perhaps, for example, an elevator needs to be added.  I can assure you when you get the bill, you won’t be sleeping—you’ll be worrying and wondering about how much product you’ll have to sell to pay for this surprise cost.

The bottom line? Make sure you read, and more importantly, understand, base year and operating costs in your lease before you sign on the dotted line.

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About the Author

Lynn Drake’s status is well known in the industry: She’s the commercial realtor focused on maintaining “true north” for her corporate clients. It’s a reputation built on 35 years of commercial real estate experience. Lynn became a commercial realtor in 2001 after 15 years in corporate real estate. Thus far in her career, Lynn has successfully completed over 1,500 real estate transactions ranging from small business tenant leases to the sale and purchase of industrial complexes.