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Are there hidden costs in your commercial lease?

On Behalf of | Dec 2, 2021 | Commercial Real Estate

If you are a business owner looking for commercial property in order to start or expand your company, you are probably aware of how important it is to take your time and carefully study a commercial lease before signing. Perhaps you also know that you have the right to negotiate certain terms of your lease, particularly those items related to common area maintenance, or CAM. 

While it is true that some landlords can sneak unexpected charges in among the CAM fees, there could also be other fees and costs hidden in the fine print of your lease. Before you sign and commit yourself to years of these expenses, you will want to be sure the property owner is not asking you to pay more than your fair share. In some cases, having a sharp eye to review your contract and a savvy negotiator by your side might even result in the elimination of some of these costs. 

Does your lease really say that? 

Because of the complexity and legalese of many contracts, it can be easy to misread, misunderstand or miss important information. Some building owners or landlords may even take advantage of that to hide extra expenses or responsibilities among the phrasing. Before signing, be sure you are confident you recognize and understand whether additional costs are couched in legal terminology, for example: 

  • Will you pay the balance for any improvements to the unit that exceed the amount your landlord allows? 
  • Does the landlord include such spaces as elevator shafts or other questionable areas when calculating the usable square footage for which you will pay? 
  • Are the management or administrative fees a percentage of your rent, or does your landlord calculate them based on his or her actual expenses? 
  • Does your lease include a fee for capital expenditures, such as repairs on the roof or HVAC system? 
  • Does your lease include a cap on rent escalation, or can the landlord raise your rent drastically, such as when a major operating expense arises? 

While you might be able to negotiate some of these, others may be altogether unnecessary and unfair. You may also find certain expenses listed more than once under different names. These are only a few ways a landlord could try to take advantage of you, and they are good reasons to enlist professional assistance before signing a commercial lease.