Commercial Leases

Get Them Reviewed Before Signing

Just finished representing a commercial tenant in a breach of commercial lease case. He did not have an attorney review the lease before he assumed this existing lease.

  1. Landlord had no obligation to make repairs to the air conditioning unit. The unit worked fine when the lease was assumed but the tenant did not ask how old the unit was, whether there were any prior repairs done, etc. In his first year of a 5 year lease the unit failed and the tenant was obligation to come out-of-pocket and get the entire unit replaced.
  2. CAM Charges (Common Area Maintenance Fees). The tenant never asked to see how much those charges were running for the few years before the lease was assumed. He never asked the landlord what long terms repairs were contemplated and never did a real inspection of the property. He occupied 41% of the entire space. In the 3rd quarter of his last year the landlord decided for cosmetic purposes to repave the parking lot and restrip it costing the tenant 3 times the normal CAM charge for any previous quarter and the lease contained no restriction on the landlord to give prior notice or cap those charges.
  3. Tax and Insurance. The tenant was obligated to pay his percentage for all property tax and insurance for the entire premises and never thought to ask the landlord before assuming the lease what those costs were over the previous few years.
  4. Landlord’s Accounting. The tenant received bills sometimes incurring a late fee and penalty (not negotiated before the lease was assumed) that did not make any sense. At no time did the tenant make any formal written demand for an accounting.

Eventually, the tenant experienced business income issues due to the economy and became delinquent in the rent. Landlord brought suit against the tenant for breach. It was at this final point the tenant retained my office. The landlord was claiming a past-due amount of $144,000 and made a settlement demand of $125,000. Because of certain discrepancies in the Landlord’s lease and accounting the case eventually settled for $42,000 under the landlords demand and $61,000 less than the claimed amount due.

Save time and future problems by having any long term lease reviewed first!

Posted in Business Law.

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