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Question
We signed a 10 year lease 8 years ago. The lease states that the landlord must do an overlay of the parking lot within 12 months of the signing of the lease. He admits that he is supposed to do it but he keeps telling me that he cannot do it at this time. He has been saying this for 7 years. His latest excuse is that the street in front of our building is in very bad shape and that if he repaves the parking lot now it will be very dangerous for our employees because the traffic in front of our building will use our parking lot to bypass the street. We have lived up to our end of the lease by paying our rent every month on time. I feel that he has short-changed us all these years by not living up to his obligation. We only have 2 years left on our lease and I don't see him repaving the lot in the near future. Do I have any recourse other than hiring a lawyer and forcing him to repave the lot?
Elaine-
You can officially notify your landlord that he is in default of the terms of the Lease, but what you do after that will need to be evaluated by your attorney. I can think of many things you could do - many involving your rental payments - however, some aggressive actions on your part could create unexpected, costly, and severe problems for your business. I suggest you ask your attorney this question.
Be prepared, you may find that your landlord has a long list of plausible but bogus reasons for the delay in doing the parking lot improvement project that may sound reasonable to a local judge.
I have one practical concern. If your lease requires you to reimburse the landlord for operating costs or CAM expenses, you may wish to consider how those reimbursements might increase dramatically the year your landlord does the parking lot improvements. I am not certain of what an "overlay" includes, however, I assume it could be anything from a simple cosmetic rehab of the lot to a complete re-surfacing and re-stripping job that would generate major capital cost. Potentially, even if such costs are not valid as reimbursement cost according to the fine print in your lease, they could be billed through cost reimbursement later by the landlord to the tenants.
You need to have a talk with legal counsel.
Be careful going forward. Good luck.
-Jim
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Answers by Expert:
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.
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