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About Jim Avancena
Expertise
I am best qualified to answer any questions that involve commercial leases, the complexities and inter-relationships of the myriad provisions that a lease may contain, and explain how they commonly effect a landlord or tenant in their day-to-day business operation. I can explain most matters that will come up during of the full lease cycle from standard industry practices regarding the lease acquistion process, concerns related to remodeling/improving the leased premises, moving-in, subletting or assigning the leased space, and a long list of other problems that may come up during the lease term. I have practical experience with most property management issues and resolving landlord and tenant disputes. Note that I am not an attorney and cannot provide legal advice.
Experience
Twenty-eight 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 find time to participate in organizations.
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 page)feature story on January 13, 1993; "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 licensed in Maryland and the District of Columbia.
Awards and Honors
Routine, the same plaques and honors that most others in my industry have earned, none that are significant.
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.
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You are here: Experts > Real Estate > Commercial Real Estate > Commercial Real Estate Investment > commercial lease
Expert: Jim Avancena - 10/27/2009
Question
I trusted my landlord, but questioned repeatedly the sq.ft. of my space. He kept saying the arial view says this is 3,500 sq.ft. The lease reads approximately 3500 sq.ft., With this landlord it has been over 20 years. My space is angled and broken up. I got a new insurance policy and they came to measure the space 3 times, it is that bad, short story I have 3000 sq.ft. short 500 sq.ft. along with that I pay taxes per my percentage. This has been my fault for not measuring sooner and taking the word of the landlord. This is commercial retail, I don't know if this was on purpose or a mistake it doesn't matter, I've been taken advantage of for decades. Do you think I have a right to go back and ask and get credits for taxes especially? I don't know if we will want to stay in this space it is cheaper than buying but I really feel angry about the shortage of sq.ft. and the overcharges for property taxes. How dumb am I for not measuring sooner? I am a woman and of course a died in the wool businessman saw me coming a mile away. I have learned a lot from this web site especially about sq.ft. I do know in the future not to trust anyone and read my lease throughly. There are other issues as well, but we have been in the same location 30 years and it would be hard to move. Even when I hae severe issues with the landlord. Because of the economy we are in heavy debt, but have still been able to maintain good credit, we work 7 days a week and that is OK we love our business but when is enough enough? Thank you very much
Answer
Mary-
You need to check on a few things about your lease, especially regarding your measurement. Overcharging rent by misleading the tenant about the amount of space they have rented is one of the most common forms of abuse in commercial leasing. However, there are many tenants that simply do not understand the technical text included in their lease.
In the area of your lease that says you have "approximately 3,500 square feet" you need to see if there are any other conditioning words in the same proximity. Is there any other text like "net", "gross", "including storage space", or any expressions that suggest or define the apparent overly inclusive method of measurement utilized by the landlord like: "as measured in accordance with the Santa Barbara Board of Realtors (an example) method of measurement", or "measured to the drip line", etc., etc.? Essentially, you are looking for clues to how the landlord might say your extra (stealth) space is indicated in the lease text.
Does your lease have an exhibit that is formally referenced in the document as part of the lease that is recognized as "the demised premises", "the space", "floor plan", etc.? In the second sentence you said the landlord used the expression "arial view" and I suppose the landlord meant (aerial?) a drawing like a floor plan; meaning a detailed drawing of your shop as if you are looking down on it from directly above, right?
If you have a floor plan or exhibit of your store space, is it sufficient in detail that it:
1.) has any measurements shown?
2.) has a symbol or symbols off to the side on the drawing that gives the scale of the drawing
or simply says "1/8 inch scale"?
3.) shows the name of the architect or space planning firm that drew the drawing and has a date?
Although photocopying floor plans often makes minor changes to the scale of the drawing, the amount of useable space you actually have inside the walls or your shop can usually be accurately determined if you have any of the refinements to the floor plan that I list above - and it is a good quality piece of evidence - - if you have such a drawing.
Additionally, often when you initially sign your lease, or when you extend your lease for a longer term, the landlord will provide the tenant with an "allowance" of funds that the tenant can use to build or remodel its shop space. Did you receive some form of "allowance" from your landlord to build your store when you first moved in or later on? If you did, the allowance is usually based on a certain amount of $$ per square foot contribution by the landlord per each square foot of your total leased space. For example, a tenant might receive a $10.00 per square foot "allowance" from the landlord to use to build or remodel their premises. In your case, you would have received $35,000 if your landlord agreed to a $10 per square foot construction or remodeling allowance. Did you get an "allowance" at any time during your 20 years of leasing your store? If so, how much was the total allowance? If you got an allowance, how much was the allowance per square foot? If you multiply the per square foot allowance by 3,500 it should come out to the total amount of the allowance that you received; or if you divide the total amount of the allowance that you received by the per square foot contribution provided by the landlord, it should come out to 3,500. Be certain to tell me if the math comes out to 3,000 in each case.
You say that you have been with this landlord for 20 years? Have you been in the same space for those 20 years, or have your increased and decreased your space over that time? If you are in the same space as you originally leased 20 years ago, are you still using the same original lease that you signed 20 years ago? If you have the same original base lease, I assume that you and the landlord have probably made some modifications/changes to that 20 year old Lease document during that long term for things like adjustments to the rental rate. If you agreed to any changes to the original lease agreement there had to be written documents that might be titled: "Lease Addendum", "Lease Modification", etc, to make those changes legally binding. If you signed a new lease or several new leases during the 20 years, you then have several complete Lease documents in your records.
You need to check all of your past documentation to see if any of the initial or subsequent lease documents contain different floor plans or have anything contained in the differing documents text that indicates how your premises were measured, how your shop's prorata share of taxes is determined, etc.
All of the above are simple ways to determine what the parties each understood about the total square footage measurement. The information above is also material that an attorney will want to review to evaluate your legal recourse.
Depending upon your geographic location, the Landlord & Tenant law in your jurisdiction may enable you to go back and collect your over payments in rent and taxes - it also may not. This is clearly going to be a legal matter if you wish to recover these funds and a local attorney will have to advise you if you have a the legal standing to seek a refund based on your lease terms and the law in your area. If you have a case you can win for a refund, your landlord will not likely return those funds unless the court orders him to do so.
Simply find a local attorney that specializes in Landlord / Tenant ("L & T") Law. The first thing you must tell them is your REAL financial position and capacity to pay, and if they DON'T balk at taking on your case, ask them to look at your 20 years of documents and tell you if you have a case that will prevail in court. If you don't have a case, you will be wiser in the future about these things. If you have a good case, I would press forward at your attorney's direction forth withe.
If you cannot find a "L & T" legal specialist on your own, simply call the local Bar Association and ask them for some references of what you are looking for. Ask each attorney referenced what they charge (especially the amount of their retainer) and to discuss what they see as the legal basics about the case. There should be no charge for this call, but be prepared to answer many, many questions in rapid succession about the situation as best you can - so do some homework before making the calls! After you have talked to a few of the attorneys, ask them also for a few case references. A good attorney won't mind you checking the quality of their work. You should pick one with which you also feel comfortable. Note that the cheapest attorney may not be the most effective selection.
I wish you luck in your efforts, and be sure to tell your attorney about your comment in the third to last line of your correspondence: "There are other issues as well,...."
Good hunting Mary. Send me a follow-up if you have further questions.
-Jim
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