When you sign a lease, you do a great deal more than just agree to pay rent. While each document varies, it's likely that you have some or all of these lease obligations in yours. Furthermore, many landlords treat them like rent. If you pay them and act on them in a timely manner, you'll be fine, but if you don't, you could end up in default. Here are the top five items to always keep in the back of your mind:
1. Annual CAM Reconciliations
If you are reimbursing expenses based on a landlord budget, you could be in for a surprise at the end of the year. Many leases require you to pay any shortfalls as a part of the CAM reconciliation process. For instance, if you have a snowier and colder than usual winter last year, your landlord probably didn't budget enough money for heating and snow removal. This usually means that you have to make a lump sump payment to catch up your CAMs. Make sure that you reserve extra cash for these payments, just in case.
2. Maintaining Operating Hours
Have you ever noticed how just about every store at a shopping mall opens and closes at the same time? This doesn't happen because each shop keeper wants it that way. It happens because those operating hours are usually formal lease obligations. While office buildings are usually a little bit more flexible about your hours, building hours come into play in a different way. If your building is "officially" closed on the weekends or after hours, your landlord might have the right to levy a daily or hourly charge for after hours HVAC or lighting use. In some buildings, they might even shut those systems down after hours.
3. Financial Reporting Lease Obligations
Some landlords like to keep tabs on your financial performance. Given that your lease could easily run into hundreds of thousands of dollars, this is reasonable. In addition, some lenders require landlords to provide financial information on tenants if the landlord applies for a mortgage. As such, if this is one of your lease obligations, you will need to be ready to provide documents like profit and loss statements, balance sheets and information on your credit worthiness on relatively short notice.
4. Building Rules and Covenants
Building rules might seem like a simple set of common sense guidelines, but they can run up against many workplace practices. If your building has a catering restriction, you could end up with limited options for Friday Free Lunch Days. Rules against animals (other than service animals, of course) in the workplace negate Bring Your Dog to Work Days. Also, don't forget about parking limitations that could leave your employees searching for carpool partners.
5. Option and Move Out Notifications
Moving out isn't as simple as just handing your landlord the keys. Frequently, you will have to notify your landlord of your intent to move out. You might even have to make your space available for showings while you are still occupying it. If you want to stay and use options to renew -- which are really lease obligations for your landlord -- you usually also have a set date on which you have to exercise them. Remember that the better the option, the less likely your landlord is to want you to take it, so it's important not to miss those dates -- even by a day or two.
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