How to Stop an Expense Lease Provision
A lease's expense provisions provide landlords financial protection to the detriment of tenants. These provisions allow a landlord to pass a greater segment of the building's operating expenses to the tenants. For example, if two tenants occupy 50 percent of a building with 50 percent remaining vacant, a clever expense provision may allow a landlord to pass 75 to 100 percent of an expense--utilities for example--to the tenants. Stopping the expense provision will take shrewd negotiating skills as most landlords will look elsewhere for tenants before capitulating.
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Instructions
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1
Compile a list of alternate rental locations. Look for properties of comparable price and size. Have this backup ready as proof that you have other options.
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Research the current rental market. If the market is down, you will have a better negotiating position. The landlord may be more willing to acquiesce than to lose a potential tenant.
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3
Read the lease thoroughly, noting all expense provisions. Calculate the portion of the expense you are shouldering versus the total expense for the building. Look to comparable properties for this data as the landlord may not be forthcoming.
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Draft a request to stop the expense provision. Include a counterproposal indicating the amount of operating expenses you will allow the landlord to gross up.
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Negotiate with the landlord until you come to an agreement. Your earlier research will guide you in deciding at what point you should accept the provision versus looking for a new location.
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6
Review and sign a new lease with any revised expense provisions.
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