5 ways Commercial Tenants could overpay on their leases
Many commercial real estate tenants unknowingly overpay on their leases, which can be a costly oversight that erodes business profitability. Hidden rebates, complex terms, and subtle clauses often escape notice until it's too late. As a tenant, understanding these potential pitfalls is crucial for safeguarding your financial health. Here are 6 common ways commercial tenants could end up overpaying on their leases:
1. Not Negotiating Lease Terms
Lease agreements are negotiable documents, and it's important to negotiate favourable terms to avoid overpayment. Being proactive in negotiations for rent, operating expenses, and renewal options can help optimize leases.
2. Operational Outgoing Fees
Landlords often charge tenants for common area maintenance expenses, like upkeep of shared spaces such as lobbies and parking lots. Tenants may end up overpaying or getting charged for services that are the landlord's responsibility. Reviewing and negotiating these fees can help reduce unnecessary expenses.
3. Missing Renewal Notice Deadlines
It's crucial to provide timely notice of lease renewal intentions to avoid automatic extensions or terminations. Use robust lease tracking systems and calendars to prevent oversights and facilitate strategic lease renewal negotiations.
4. Auto-Paying Landlord Invoices
Setting up automatic payments for landlord invoices can be convenient, but it's important to carefully review invoices for accuracy and discrepancies to avoid overpayment.
5. CPI (Consumer Price Index) Increases
Landlords sometimes try to raise rents more than they're allowed to under the lease. A good system for managing leases solves this problem by using reliable data to give tenants accurate information to compare with the landlord's proposed rent increase. This helps to find any mistakes and makes sure that tenants only pay the amount they're supposed to under their lease.