Friday, February 2, 2007

Ill-Defined Provisions are Generally Interpreted in the Landlord's Favor.

"Many tenants focus exclusively on things like fixed rent, operating expenses, real estate taxes, insurance, utilities and sundry charges. In many office leases, the landlord is required to provide basic services which are included in the monthly rent or charged extra via the operating expense reimbursement clauses. Services typically include heating and cooling, cleaning and vacuuming, electricity, elevator services, security, water, and parking. The landlord also maintains, repairs, landscapes, cleans and lights the public areas of the building. Extra services for which the landlord typically bills extra may include special security, freight service, overtime heating and cooling, and after-hours special cleaning.
It is best for both parties to anticipate these services and specify the rates and quality of the services as well as the mechanism for requesting them. If pricing or a methodology for costing the services is omitted from the lease, the tenant can be at the mercy of the landlord. Likewise, the landlord should be fairly compensated for running a chiller all weekend during a hot summer.
Some specific examples of services that can be negotiated upfront by both parties:
• Definition of normal building hours and how operations are affected by weekend or holiday.
• Normal hours for heating and cooling.
• Performance levels for HVAC and response time for adverse conditions.
• Electrical power supply capacity.
• Method and pricing of utilities (electric, gas, water, sewer).
• Cleaning specifications and timing.
• Cafeteria, gym, daycare and parking hours.
• Elevator service and hours (passenger & freight).
By discussing, anticipating and negotiating some of these services upfront both parties can set expectations properly for extra services. The tenant will be happy with the level and quality of services and the landlord will benefit from a satisfied tenant that pays the agreed-upon charges promptly." from SS&C, May 12, 2006 For more information contact Ed Ayres at : www.houstonrealtyadvisors.net
or phone 713 782-0260