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commercial property lease question

1,020 Views | 6 Replies | Last: 4 yr ago by francine
studioone
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If you are a landlord or tenant of commercial property, whats in your lease about ac repair and replacement?

I know this varies among landlord/ tenants, but a friend of mine owns a florist shop and if their ac goes out, they have to buy a totally new one and then that becomes property of the landlord.... win for the landlord, but not for the tenant.,

and then i've heard completely opposite.. where landlord has to fork out 100% on repair or replacement..

Ive got a commercial property with 2 ac units that could stand replacing.... just wondering whats the NORM...
Bitter Old Man
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AG
No such thing as a "norm" in commercial leasing. It all depends on the lease, which depends on who wrote/negotiated it. Small businesses often sign stupid leases because they dont know better.

Businesses should ALWAYS use a commercial broker (not a realtor) and a lawyer when signing a lease. Otherwise, you might end up buying the LL a new AC unit.
Bitter Old Man
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AG
Also, if I was a LL, I would probably want a florist to cover AC costs as well. Florists work AC's hard both from the low temps they want and the high humidity that comes from fresh plants/flowers.
dc509
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AG
It just depends on what's in the lease and the type of building. Most of the leases I've seen have some cap on how much the tenant is responsible for. Most tenant rep brokers push for $500 annually, and it ends up somewhere around $1000-$1500.

Quote:

Businesses should ALWAYS use a commercial broker (not a realtor) and a lawyer when signing a lease. Otherwise, you might end up buying the LL a new AC unit.

This ^^^ cannot be stated loudly or often enough.
mazag08
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AG

Quote:

Businesses should ALWAYS use a commercial broker (not a realtor) and a lawyer when signing a lease. Otherwise, you might end up buying the LL a new AC unit.
Harkrider 93
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AG
Retail space is usually Triple net, so the tenant pays for the A/C.

Office condo is usually something like cap max (can't remember what it is called). It is where the tenant pays any increases in taxes or costs up to a max per year. That max isn't very much, so you would foot most of the bill on an A/C.

This info comes from my commercial agent who has helped me purchase and write (more like copy) lease agreements.
Bitter Old Man
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AG
Harkrider 93 said:

Retail space is usually Triple net, so the tenant pays for the A/C.

Office condo is usually something like cap max (can't remember what it is called). It is where the tenant pays any increases in taxes or costs up to a max per year. That max isn't very much, so you would foot most of the bill on an A/C.

This info comes from my commercial agent who has helped me purchase and write (more like copy) lease agreements.

Normal Triple Net doesn't typically include capital expenditures (like buying a new A/C unit), but again it depends on the lease. The caveat is Single Tenant Triple Net, like a Walgreens, where the LL owns the building/land, but T is responsible for everything. Commercial LL's can put WHATEVER they want in a lease, so thats why people need brokers and lawyers.
francine
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In the most common lease, the landlord is responsible for all the structural damages and repairs. But the repair and maintenance of all the systems like plumbing, mechanical, electrical, etc is a responsibility of the tenant. When the landlord conducts a commercial inspectionand learns about the damages in the systems, he/she can ask the repairing or replacing cost to the tenant.
But there is one 'wear and tear' clause. If the inspector inspects that equipment is damaged because of wear and tear, the tenant is released from the responsibility and the landlord has to pay the replacing cost.
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