Here’s a tip for child raising, a subject far afield from Ruminations’ charter, but maybe not. Answer every one of your child’s requests with a firm, “no.” Then, resist her or his fervent pleas for relief. Then, gradually allow yourself to get worn down, and accede to most of the entreaties, but not in a way that your child can deduce your logic. Then, repeat that every day until your child grows up and moves away. [Read more...]
Getting From “No.” How Raising A Child Is Like Negotiating A Lease Or Other Agreement.
June 16, 2013 By 1 Comment
31 Items That Shouldn’t Be Found In A List Of Operating Expenses If A Tenant Is Paying The Bill
June 9, 2013 By 9 Comments
Last week we promised a list of 30 Operating Cost carve-outs a tenant might seek. We found a 31st lying on the floor. So, in a giant departure from our usual Ruminating, save for an ending paragraph to this blog, we’ll just post that list and say nothing more than what is in this paragraph. We’re not abandoning our usual rambling approach or even taking a week off (given that we wrote this week’s post quite some time ago). It’s just that we’ve written about some of these items before and promise to write about those and many others for a long time to come. So, without further ado (other than to apologize to Shakespeare or Marlowe or Bacon or whomever), here is our list. It is aimed at an office building because that gives us the opportunity to write a longer list than that for a retail property, but it can be easily adapted to retail projects. Tell us what we’ve missed. [Read more...]
CAM Costs (Or Operating Expenses) – Always A Conflict Of Interest Between Landlord And Tenant
June 2, 2013 By 5 Comments
Last week’s posting about pass-through “caps,” such as for CAM Costs (or Operating Expanses), Taxes, Insurance Premiums, and the like engendered a lot of discussion here, on LinkedIn, and across various “back channels.” Much of that discussion wasn’t about “caps” themselves. It was about the mystery of how the Common Area Maintenance (CAM) Cost “sausage” is made. [Read more...]
What’s The Problem With A Cap On CAM Costs Or Operating Expenses Or Taxes?
May 26, 2013 By 9 Comments
Once parties to a lease (those being a landlord and its tenant) agree that the tenant will pay a share of operating expenses (or call them common area maintenance – CAM – costs) or taxes, what has been agreed is that the tenant will pay its share, not 35% of its share (or some other figure, like 92% or 107%). Yes, its share!
We’ve Ruminated about some aspects of what falls into the bucket called CAM Costs or Operating Expenses, and we’ve Ruminated about what might and might not be a “tax.” [We have more to say about a “tax,” but not this week.] But, once you’ve determined what falls into the bucket and what the tenant’s percentage might be, is there anything to do beyond some multiplication? Very often, the answer is “yes.” Tenants like to “cap” what they pay, i.e., pay no more than some negotiated limit even after Operating Expenses or taxes have been allocated by a fair percentage formula. [Read more...]
A Pig In A Poke And Other Lease Negotiation Sad Tales Of Woe
May 19, 2013 By 5 Comments
Have you ever bought a $300,000 house solely based on reading a classified ad? What about doing a $3,000,000 lease (30 years, including options, at $100,000 a year) without ever seeing the property or at least taking a good “look” at the property from far away? Why would you NEVER buy a house that way, yet regularly do a lease based solely on a term sheet and with no other “due diligence” investigation? Simply said, you shouldn’t. [Read more...]
What Would Rent Insurance Be If There Were Such A Thing?
May 12, 2013 By 5 Comments
So, the lease requires the tenant to carry a policy of “rent insurance” or requires the landlord to carry a policy of “rent insurance” or, worse, requires both of them to do so. What does that policy say and how does it work?
Trick question! You won’t find a rent insurance policy. You may find a commercial property insurance endorsement providing coverage for “rental value,” but don’t look for “rent insurance.” While you are at it, don’t call it: “rental interruption insurance,” “rent loss insurance,” or “rental income insurance.” Those are nice concepts, but lack any precise meaning. If you want to call it “use and occupancy insurance,” go ahead, but that form of policy is long, long gone. [Read more...]
Oldies Are Not Necessarily Goodies, Especially When You Find Such Terms In Your Leases And Other Contracts
May 5, 2013 By 4 Comments
We wanted to address “Rent Insurance” today, but got somewhat distracted when we started out by writing “there really isn’t something called ‘Rent Insurance,’ even if lease writers insist otherwise.” We then were going to describe “Business Interruption and Extra Expense Coverage” because that’s really what lease writers are thinking when they say “Rent Insurance.” That was to take us into “how all of that works” and “where it doesn’t work.” It would have been pages long. [Read more...]
In A Lease, If I Didn’t Do It And You Didn’t Do It: Who Should Suffer The Loss?
April 28, 2013 By 5 Comments
Stuff happens. Ask Bill Nye or David Hare.
And, in modern America, it seems as if someone else is always at fault, not me. [If you take no blame, it must be them; Who must then pay my fines. It's really is quite the cleverest ploy; By which illogic shines. – Gary Bachlund.]
Actually, there are times when bad things happen and the landlord and its tenant are each “good people.” Here are some examples: [Read more...]
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