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Charles Feitel

What Your Landlord Doesn't Want You To Know About Dental Office Leases (Part II)

What Your Landlord Doesn't Want You To Know About Dental Office Leases (Part II)

5/31/2019 6:34:37 AM   |   Comments: 0   |   Views: 9

CAM Fees

CAM fees are what you pay for your use of the common areas of the building. Common Area Maintenance (CAM) fees are a normal part of every lease. To figure out this number, landlords use a little something called a “load factor.” This is the formula for it:

Rentable Square Feet/Usable Square Feet = Load Factor

There’s no standard way of arriving at this amount. This leaves the door wide open for landlords to calculate the number in a way that makes them the most money.

So, what landlords end up charging their tenants can vary wildly.

That’s why you need to find out the methodology your landlord uses to arrive at your number during negotiations. Only pay your fair share of the CAM fees. And not a penny more! Check to make sure you’re not paying for anything other than fees related to the maintenance of the building.

This includes paying salaries for property management staff, significant repairs or renovations, or an unexpected tax bill for your landlord.

Don’t sign anything that unfairly burdens you with repair costs. These things are known as “capital expenditures” and are major structural repairs like the roof and foundation.

The Definition of Nonstructural

 Leases often say that tenants are free to make any nonstructural alterations. However, you and your landlord might not agree on what’s considered structural and what isn’t. Even switching out a light fixture could get you into loads of trouble.

Therefore, it’s clearly in your best interests to have the term “nonstructural” explicitly defined in your contract.

Personal Guarantees

 Most landlords won’t sign unless you personally guarantee the lease. Consider yourself fortunate if you can get away without agreeing to one. But even though most landlords make them mandatory, personal guarantees are negotiable. This is something your landlord might be reluctant to tell you.

If the event you default, your landlord might ask that you pay all rent during the lease period you agreed to. Plus, the costs of any improvements he made.

To limit your liability, ask that the guarantee be only for a specified period. For example, if you’ve committed to a five-year lease, request that the guarantee be only for the first two years.

Negotiate a Lease with Built-In Protections

Commercial leases written by a landlord or the landlord’s broker are often full of booby traps. This leaves you exposed to hidden dangers.

This is all legal, as there are no rules in leasing commercial real estate. It’s all totally “CAVEAT EMPTOR” (“Let the buyer beware). The problem for the medical practitioner is that a commercial lease isn’t regulated the same way a residential agreement is.

In all states, residential leases are governed by various local and state laws. Unfortunately, these laws tend to focus almost exclusively on residential renters. Commercial tenants have few protections, and once a lease is up, landlords often have free rein to raise rents to whatever they want.

If you have a commercial lease, you have no protection from an unethical property owner except for what is clearly outlined in the contract. So how do you protect yourself from an unethical landlord?

Simple.

By having your tenant rep negotiate a fair lease that protects your best interests. And, one that provides a remedy if your landlord tries to defraud you. Have your tenant rep explicitly outline your protections in the lease. In some cases, an agreement that forces you to give up certain rights might not be enforceable.

But why take that chance?

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