You are here:

Commercial Real Estate Investment/misplaced commercial security deposit

Advertisement

Expert: - 1/30/2009


Question
I joined a medical practice in 2001.  The practice has been in the same office suite since 1982.  Our lease comes up for renewal approximately every 5 years.  The owners/landlords of the building have changed multiple times since 1982.

In 2003 the practice renewed the lease.  In the agreement they asked for a $9000 security deposit.  This was crossed out in the agreement and not paid presumably because we already had a deposit in place from the previous lease.

Approximately 2005 the ownership of the building changed hands.

In August 2008 we renewed our lease.  In the agreement we agreed to put down a security deposit equal to the difference of $13000 minus our security deposit in place (presumably $9000).  The building owner claims there is no record of any security deposit in place and demands the full $13000.  The older partners in the practice are pretty sure they put down a deposit when we moved into the suite more than 20 years ago, but they don't have the records.  Our accountants have not kept the records that far back because of statutes of limitations.  We have the names of the previous owners, but many of them are no longer in business.

Is there any way we can figure out and prove that we have a previous security deposit in place?

Answer
David-

This is a common problem. I believe that an attorney may need to handle this matter for you.   Check each of your previous leases carefully for text that describes how each security deposit was to be handled and it should also say who is/was responsible for the funds in various situations.

Be certain to add language addressing how your security deposit will be handled in your next lease.   If the property is sold, I suggest that you include in writing that the deposit funds be returned to you at transfer of the property.  Let it then be you that passes on the funds to the next owner of the property.

Good luck,

-Jim

Commercial Real Estate Investment

All Answers

Answers by Expert:

Ask Experts

Volunteer

Jim Avancena, CPM

Expertise

Best qualified to answer questions that involve commercial leases, that is, basic issues as well as the often unexpected effects of the complexities and inter-relationships of the provisions a lease may contain, explain how seemingly innocuous text in your lease can have a major impact on a Tenant or Landlord and their business operations, and the common practices utilized in the industry. I can untangle most matters that may come up from the time a tenant begins searching for a office or store space and the lease acquisition process, concerns related to remodeling/improving the leased premises, moving-in, subletting or assigning the leased space, and a long list of problems that may come up during the lease term and even after a tenant moves out. I have practical experience with most property management issues and resolving landlord and tenant disputes - especially those involving what may appear to be overcharges assessed for additional lease charges like CAM costs, operating expense reimbursement, real estate taxes, utilities, construction improvements etc. Note that I am not an attorney and cannot provide legal advice.

Experience

Thirty years active experience in the commercial real estate industry as a licensed real estate broker in the Washington DC Metro area (DC, Northern Virginia & Maryland). I have been admitted (approved) by the Maryland and DC courts to testify as an expert witness on the subjects of Commercial Leasing and Property Management in the area of standard industry practices. I have had a business for the last 14 years advising virtually every form of business entity from large national corporations to the smallest ma & pa new businesses regarding a wide range of commercial real estate matters in addition to property management and commercial leasing.

Organizations
Currently my three children keep me so busy that it is difficult to participate in organizations with continuing and specific time requirements.

Publications
I publish a local commercial real estate newsletter titled: "Tenants First". My firm was the subject of a high profile Washington Post business section cover page (2.25 full pages) feature story on January 13, 1993; titled "Overcharging Overhead".

Education/Credentials
BA in Political Science from Memphis University, and five years of study in the real estate development summer program at MIT. I was certified as a commercial property manager (CPM-IREM), and currently hold a brokers license in Maryland and the District of Columbia.

Awards and Honors
The same plaques and honors that most others in my industry have earned. I have none that I consider especially meaningful.

Past/Present Clients
Past clients include: The World Bank, George Washington University, National Association of Criminal Defense Attorneys, US Department of Commerce, The American Benefits Council, K-Mart Development, many law firms, a national union, other major organizations, and many, many small business firms and retail operators that I am most honored to serve. I estimate more than 1,500 firms/organizations.

©2012 About.com, a part of The New York Times Company. All rights reserved.