HOW MUCH IS MY RENT?

Your lease states, under a paragraph called "Rent" that you are to pay a sum of money to the lessor once a month, on the first day of each month during the term of the lease.  Is that all it costs you to "rent" the location from your lessor?

Look further under the lease.  You will see phrases such as "Operating Expenses" or "Maintenance, Repairs, Alterations and Common Area Services," or "Liability Insurance - Lessee," or "property Insurance" or "Real Property Taxes."  A number of words will follow each one of these phrases, defining what is meant, but not setting forth a specific dollar amount.  If you want to understand the nature of each one of these charges or potential charges, you need to ask questions of your lessor, preferably before you sign the lease.  If you don't understand the phraseology of the lease, you need to retain an attorney to assist you, so that he can explain the terms of the lease to you and ask the proper questions on your behalf.

These are difficult economic times.  In order to make sure that your business enterprise survives rather than fails, you need to carefully understand the nature of the expenses that will confront you when you enter into the business, and carefully monitor your expenses thereafter.

When considering the acquisition of a coin laundry, have you examined the utility bills?  Sewer usage charges are imposed in most municipalities through statements rendered by a local department of water and power.  In some situations, however, sewer usage charges are to be found under the property tax bill.

Lessors who discover water sewer usage charges imposed upon their real property tax bill will customarily be careful to set forth the lessee's obligation in this regard under the lease.  Lessors will, as a matter of caution, pass along as a charge to the lessee any obligation which vaguely touches upon the subject of water.  One lessor, for example, quoted his real property tax bill and provided as follows: "Lessee shall be responsible for the cost of all water used on the Premises, including, but not limited to, any changes by governmental authorities, including, but not limited to, any sewer usage charge, mosquito abatement fee, water stand-by charge, flood control charge and similar type charges which appear on the Joint Consolidated Annual Tax Bill for the Premises."

Do the common area maintenance expenses to which you contribute a proportionate share include administrative fees?  Some of these fees are entirely legitimate and are incurred by lessors who employ secretarial and bookkeeping services.  Other lessors, however, do little in the way of administration, but nonetheless impose substantial administrative fees upon their tenants.

The only way to properly protect yourself is to carefully read and understand your lease, preferably with the aid of an attorney, before you take pen in hand.  After the signature ink has dried, your negotiating leverage will also have dried up!

[This column is intended to provide general information only  and
is  not intended to provide specific legal advice; if you have  a
specific  question  regarding the  law,  you  should  contact  an
attorney  of your choice.  Suggestions for topics to be discussed
in this column are welcome.]


Reprinted from The Journal
Myles M. Mattenson © 2009