For
the next few weeks, I will endeavor to sound like a broken record. Or is it Groundhog
Day? Or as Yogi Bera once opined - “it’s Deja Vu all over again.” Not that I’m
partisan - my goal as a commercial real estate practitioner is to inform my
readers about the ins and outs of splitting the tax roll. Today - with full
permission - I’ve borrowed a review of certain AIR CRE lease documents from
Usman Mohammed from Consensus Legal P.C. If you have questions, you can contact Image Attribution:www.danjacoby.com
Usman directly:
Direct: (213) 814-2552
Email:
Usman@ConsensusLegal.com
Many, many small businesses have entered into one of the below AIR CRE leases and are governed by their language.
Industrial/Commercial Leases
Single-Tenant Lease – Gross: Tenant pays
increases in Real Property Taxes over the fiscal tax year during which the
Commencement Date Occurs. (Paragraph 10.2.)
Single-Tenant Lease – Net: Tenant is
responsible for Real Property Taxes. (Paragraph 10.2.)
Multi-Tenant Lease – Gross: Tenant is
responsible for Tenant’s share of any increase above the Base Real Property Taxes
(i.e., the Real Property Taxes assessed during the calendar year in which the
Lease is executed). (Paragraph 4.2(a)(v).)
Multi-Tenant Lease – Net: Tenant pays
Tenant’s share of Real Property Taxes. (Paragraph 4.2(a)(v).)
Multi-Tenant Month To Month Lease – Gross: Paragraph
10 provides: “Landlord shall pay any Real Property Taxes.” In this
AIR CRE Lease, Landlord is responsible for all Real Property Taxes.
Land Lease – Gross: Tenant is responsible for increases in Real Property Taxes over the fiscal tax year during which the Commencement Date occurs. (Paragraph 10.2.)
Office Leases
Multi-Tenant Office Lease – Gross: Tenant pays
Tenant’s share of the amount by which all Operating Expenses (including Real
Property Taxes) for each Comparison Year exceeds the amount of all Operating
Expenses for the Base Year. (Paragraph 4.2(a)(v).)
Multi-Tenant Office Lease – Net: Tenant pays Tenant’s share of all Operating Expenses (including Real Property Taxes). (Paragraph 4.2(a)(v).)
Shopping Center Lease
Multi-Tenant Shopping Center Lease – Net: Tenant is
responsible for Tenant’s share of all Common Area Operating Expenses (including
Real Property Taxes). (Paragraph 4.2(a)(v).)
You, as a Tenant, would be well advised to review your lease carefully. If the heading contains one of those above - you know the impact. If not, seek counsel. If you’re considering entering into a new lease - you are certainly advised to ask for Proposition 15 protection.
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.
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