QUESTION
Can a landlord charge the tenant more than 10% as stated in the contract for administration/supervision? Here is the clause in our contract:
Asked on Jan 24th, 2012 on Business Law - Nevada
More details to this question:
"Tenants will be responsible for their share of all costs to supervise and administer said common
areas, parking lots, and other areas used in common by the tenants. Said costs shall include such fees as may be paid to a third party in connection with same and shall in any event include a fee to Landlord to supervise and administer same in an amount equal to (10%) of the total costs."
My Landlord charged me much more than 10% of the total CAM.
When I pointed out the above clause, this was his response:
The clause says "said costs shall include such fees as may be paid to a third party in connection with same and shall in any event include a fee to Landlord to supervise and administer same in an amount equal to (10%) of the total costs.." The word "and" makes it two different items. There is the cost paid to a third party manager and also 10% to the Landlord.
Is his argument valid? Why do I need two parties (Landlord and Management company) to supervise/administer the property?
1 ANSWER
R. Christopher Reade
It is standard in commercial real estate for a Landlord to indicate that Common Area Maintenance costs [CAMs] will be a pass-through to the tenants (either in total for single tenant properties or pro rata for multi-tenant spaces). Whether ten percent is arbitrarily high is in some measure related to how large the CAMs are. The lease specifies that the Landlord will pass through any costs which Landlord incurs (which is generally a maintenance company) plus a 10% fee for Landlord to supervise the maintenance company.
As to why would you need 2 companies, the answer usually is that you do not need 2 companies/entitles to supervise the property and this provision works to the benefit of the Landlord because the time and effort expended by the Landlord to do a pro rata division does not equate to 10% of the CAMs. But the provision is not so unconscionable that it is voidable.
Answered on Apr 20th, 2012 at 1:47 PM