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  • Writer's pictureRenee Ervanian

ELIMINATING EXPENSE STOP OVERAGE ERRORS


Tenants, when relocating their office or renewing a lease, tend to focus on rental and parking rates, free rent and Landlord upgrades. Expense stop language, many times, does not get a lot of attention in lease negotiation. As a result, Tenants may receive invoices with unexpected costs, many times equating to thousands of dollars. How can the Tenant protect themselves against unexpected expense stop costs?

* The rentable square footage (RSF) leased by a Tenant equates to a proportionate share, identified in the lease. Proportionate share is defined as:

Rentable Area of Premises (Numerator)

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Rentable Area of Project/Building (Denominator)

The proportionate share of the premises may decrease during the lease term but should not be able to increase, which could add unlimited and unexpected expense to base year overages and tenant rental invoices. Decreasing the proportionate share does not specifically mean that the RSF, or physical premises will decrease or that Landlord amenities, such as employee lounge or fitness center are deleted. It is instead, referring to a Landlord recalculation of numbers.

* Building Operating Expenses are typically divided between Controllable Expenses and Uncontrollable Expenses. Controllable Expenses are usually capped at five percent annually. Uncontrollable Expenses often will not have a cap. Historically, uncontrollable expenses have been defined as property taxes, property insurance and utilities. If an array of other items are itemized under Uncontrollable Expenses in a lease, requesting deletion should be considered.

* There should be a "No Later Than Date" included in a lease, such as March 31st of the following year as the latest timeline a Landlord can invoice a Tenant for expense overages from the previous year. If Landlord overages are not submitted by the "No Later Than Date", they should become void. Invoicing a Tenant for years of overages due to Landlord recalculation can cause significant budgeting issues and upset.



For questions regarding expense stop, lease renewal or relocation:

602.330.7482 (Direct Phone/Text) or




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