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Why You Should Have A Complimentary Lease Review (Part VII)

Why You Should Have A Complimentary Lease Review (Part VII)

9/23/2019 6:04:41 AM   |   Comments: 0   |   Views: 8

Restoration Clauses

 Next, your tenant rep will want to take his magnifying glass to any restoration clauses you might have in your lease. Lots of practice owners gloss over them, but if you do that, you're making a big mistake.

A restoration clause obligates you to restore the premises to the way they were before you took possession of them. For example, if you installed a stairwell and have one of these clauses in your contract, you'll be required to remove it upon vacating your office space.

This could prove to be quite costly for you.

Have your tenant rep fight hard to strike these clauses from your lease. If the next tenant can benefit from the improvements you've made, you definitely shouldn't have to do any restoration. 

Financial Audits

Your broker will also look to see that you have the right to audit your landlord's financial records. If you have the right to audit, you'll make sure your landlord uses the ways of calculating costs you so painstakingly negotiated for. 

Because commercial leases are so incredibly complicated, it's not uncommon for landlords to overcharge their tenants. When your landlord does this, you'll end up paying for things your contract says you don't have to pay.

Errors can result from miscalculations of monthly expenses. These are things like liability insurance, janitorial costs, common area maintenance fees, and property taxes. Also, capital expenditures are notoriously not amortized in the right way.

But overcharges can also happen because the person your landlord hired to do the monthly billing hasn't bothered to review your lease to see what you should be paying for.

All of this is why you should have your tenant rep negotiate for the option to audit your operating expenses every year. When you get this right, you or your representative will be able to go over your landlord's financial records to doublecheck their accuracy. Your audit clause should cover critical points like who pays for the audit and what you can do should you find errors.

Keep in mind some auditors work on a contingency fee basis. So, the bigger the error, the more you'll have to pay them.

For obvious reasons, your landlord may not want to hire this kind of auditor. Allay his concerns by suggesting that the choice of the reviewer is something you both have to agree on.

If you ask for an audit, you'll probably have to pay for it. You should negotiate an understanding that if the review reveals an overcharge higher than a certain percentage, the landlord will have to pay for it instead.

This percentage is usually three to five percent.

Your landlord will probably want to make sure that uncovering an honest mistake won't give you the right to terminate your lease.

However, if the audit finds out that your landlord intentionally made the error, you should have the right to cancel your contract.

Conclusion

 So there you have it—a bunch of excellent reasons why it makes sense to get a complimentary lease review.

Since it's free, you have absolutely nothing to lose. Moreover, we might be able to save you thousands of dollars.

There are unscrupulous landlords out there who sneak clauses into their leases that benefit them by taking money out of your pocket.

 It takes a trained eye to uncover this kind of deception.

At HPRG, we'll scrutinize every word of your lease and make sure everything in it is in your best interests. We've exclusively specialized in the healthcare real estate field for over 20 years, so we know what we're doing.

If you settle for poorly worded lease, your bottom line can suffer.

You cannot afford to let that happen!

Call us today, and we'll set aside some time to sit down with you and review your lease. Word by word and line by line, we'll tell you if your landlord is cheating you and what you need to do about it.

Also, if you hire us as your tenant rep, we'll be your tireless champion come negotiation time. With us in your corner, you won't leave so much as a penny on the table.

As a commercial tenant, you'll probably only do negotiations once every five years or so. Every time you go through this process, you might learn a thing or two. However, you probably forget everything you learned when it's time to negotiate again.

On the other hand, landlords have plenty of practice in putting together leases and they help make up the rules of the game to favor themselves. So, when you sit down at the negotiating table without an experienced healthcare real estate agent to advocate for you, your landlord could end up cheating you out of your hard-earned cash.

Call us today and we won’t let that happen!

 

 

 

 

 

 

 

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