Lease Question

Business By tcakes65 Updated 14 Sep 2007 , 2:37am by PieceofCakeAZ

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tcakes65 Posted 12 Sep 2007 , 3:36am
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I'm in the process of going legal and opening a retail space. I'm in contract negotiations for a great place close to my home. The landlord came back with a response this afternoon to my letter of intent to lease and wants me to be responsible for all expenses related to the HVAC (heating/ventilation/air conditioning). I know business leases are different than a residental lease. However, is it common for a tenant to be responsible for HVAC expenses in a business lease? If at any time the system permanently quits, it could possibly cost my business $6000 to replace the unit. The landlord agreed that I would be responsible for minor repairs throughout the lease and he all major repairs. However, his expection is he wants me to be responsible for the HVAC. If anyone has any knowledge or advice, I would appreciate comments. This is stressing me out, and I really don't think it's right for me to take on such a potentially major expense. It could bankrupt my business with it being a start-up. I told the property manager that I wouldn't accept the terms regarding the HVAC, and he's going to let the landlord know. I'll find out tomorrow if he is agreeable to the terms or won't budge.

7 replies
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cupcake Posted 12 Sep 2007 , 6:53am
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All leases are different. The owner can put whatever he wants to on the lease. I would check around your area, or talk to a real estate agent about the common practices. Nowadays owners don't want to pay for anything, such as a triple net lease. I would also have the unit checked or even talk to whoever leased the building before you. Also check the previous bills. Losing your a/c could be devastating as you said. Most of the minor stuff is normal for you to keep up. I have a friend that has a large strip mall that she leases to folks, she takes care of major things and that does include the central air and heat units.

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Shazzicakes Posted 12 Sep 2007 , 7:18am
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It is normal for the tenant to be responsible for the servicing of the airconditioners. Most leases then go on to say "fair wear and tear excepted", but I would clarify it in my lease as I find it a really subjective phrase! Rather get them to word it something like :The lessee shall maintain the a/c plant which serves the premises. Major repairs with regard to a fatal flaw, outsided the routine maintenance of the plant will however be for the Lessor's account.

Of course, if you can get the landlord to pay, better yet!! (Just be careful of "operating costs" if he does - make sure a/c costs are excluded.)

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cocorum21 Posted 12 Sep 2007 , 11:45am
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Like others have said all landlords are different. I used to have a salon and I know that I was responsible for the A/C before that I worked in a salon and the A/C actually went out and the owner had to fork over her own money to replace it. Here in the city I live the city inspectors check it and if it has problems they make the landlords take care of it which is the way I think it should be. I would suggest getting an A/C person to come and do a run through of the unit and tell you what it may need and if it's running in tip top shape before signing the lease.

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captrick Posted 12 Sep 2007 , 11:55am
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If the landlord expects you to be responsible for "normal maintenance" I would make sure what you're required to pay for and not to pay for was spelled out specifically in the lease...otherwise, you're just opening yourself up to a fight when it does go out.....

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tcakes65 Posted 14 Sep 2007 , 12:06am
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Thanks to everyone for the information. It's been very helpful. I received a response from the landlord today via the property manager. He wants me to be responsible for all AC repairs and replacements at a cost of $750 or less per occurrence. icon_surprised.gif He also wants the business to sign a 5-year lease versus a 3-year lease. He's amendable to 36 months as long as we provide a 90-day notification of termination at 36 months and pay him a penalty of 6 months rent. icon_eek.gif In my opinion, this guy is nuts. It looks like I'll be walking away from this one. Unfortunately the previous owner sold the building, and we're dealing with a new landlord--a greedy one at that. I countered with a reduction in base rent if we accept the terms. I know he won't go for it, but I just had to throw it out there. My other proposal was a 36-month lease with no penalty and the business shall be responsible for the quarterly maintenance of the AC unit. I stipulated that the business would be responsible for any repairs or maintenance $200 or less and that the landlord will be responsible for all repairs/replacements $200 and over. Along with that I still requested that the landlord be responsible for 100% of the replacement cost of the AC system shall it malfunction. It looks like I'll be out searching for a new place for my storefront. This guy would rather let the space sit there than compromise. Half the units in his facility have been sitting empty for months. Moron! icon_mad.gif Thanks for letting me vent! icon_biggrin.gif

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littlecake Posted 14 Sep 2007 , 1:14am
post #7 of 8

how funny. i just had mine fixed today.

i was kinda sweating it out (pun intended)....

i was really praying it wouldn't be anything major...thank the good Lord it only needed the coils cleaned, it was under 100.00....about 18 months ago i had to replace the top motor, after a car hit it.

it really is a pain being responsible for everything.

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PieceofCakeAZ Posted 14 Sep 2007 , 2:37am
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Unfortunately I am very familiar with the HVAC responsibility. Our AC went out 3 months after we leased our space and we had to shell out $4500 to get a new one.

I highly recommend that you have the AC professionally inspected prior to signing any lease. It will cost you up front but it could save you in the long run.

Best of luck!

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