How to mitigate Surprise Expenses

October 11, 2017

Leases are complex documents with many clauses that, unless negotiated properly, can allow your landlord to charge you more rent during your lease term. The following is an example of such a clause and how to negotiate it upfront to avoid unexpected costs:

THE MEASUREMENT CLAUSE: In North America, the most common standard of measuring commercial space is the Building Owners and Managers Association standard (“BOMA”). This measurement standard has been revised over the years, and with BOMA being a “landlord centric”
organization, each revision becomes less tenant friendly. In the simplest terms, the most tenant friendly version is the 1980 BOMA standard which is now rarely used. The most common version is the 1996 BOMA standard. BOMA recently introduced the 2010 BOMA standard which allows landlords to include even more common areas and other building elements into a tenant’s total rentable area. For tenants, this means that while the amount of space you occupy stays the same, the amount of square footage you pay rent on increases.

When negotiating a lease, it is important to try and establish the most tenant friendly method of measurement for your premises. However, what is even more critical, is to include a provision that your premises cannot be re-measured with a new measurement standard during your lease term
or during any renewal period. This provision is most often overlooked and can cause a big surprise for tenants.

Contributed by Scott Mulligan
Partner, Ellington

For more information about Scott or
Ellington Real Estate Ltd., Brokerage click on this logo

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