OPERATING EXPENSE CLAUSES IN COMMERCIAL LEASES: Operating Expense Exclusions – Real Impact on a Tenant’s Bottom Line

Many commercial leases contain provisions requiring the tenant to pay, in addition to the fixed rent, amounts to reimburse the landlord for the tenant’s share of the costs and expenses of operating and maintaining the property. Such provisions may be known by various names, such as Operating Expenses, Common Area Maintenance Charges, etc. The provisions describe the nature of the operating expenses that landlords can pass through to tenants, but invariably they will have a “catch-all”, so a tenant cannot be certain of the universe of operating expenses that a landlord may attempt to impose upon the tenant.

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