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Lease Language Establishing a ‘Fixed Amount’ of Operating Expense Rent Helps a Florida Commercial Tenant Win its Unpaid Rent Case

If your business operates from a leased space, one of the most important business acts in which you’ll engage is the negotiation of your commercial lease. During this process, and before you sign on the line, it is important to sure that you understand all of the terms of your lease, including what each provision can do and what it can’t do (both for you and against you.) Once your experienced South Florida commercial real estate attorney has armed you with all of that knowledge, then you can make the best decision about whether or not to execute that document.

A North Miami Beach restaurant’s case is an example of this point. The restaurant signed a lease agreement in 2011 to rent a space in a shopping mall. The lease term was 10 years and stated an amount of “minimum rent,” which was $19,481 per month. The lease agreement also contained an “additional rent” provision that made the tenant responsible for paying, among other things, a certain amount of operating expenses.

The contract also stated that the tenant’s operating expenses portion of additional rent would increase by the fixed amount of 3% per year, “notwithstanding the actual amount of Operating Expenses otherwise allocable to the” space the tenant leased.

A dispute erupted over how much additional rent was due and, after several months of alleged underpayment by the restaurant, the landlord sued for eviction. The landlord asserted that the restaurant owed more than $128,000 in unpaid rent. After the trial, though, the judge concluded that the restaurant was fully paid up in all rent due and owed the landlord nothing in unpaid rent.

The appeals court upheld that ruling in favor of the tenant. The key to the tenant’s success was its clear understanding of what the “additional rent” provision could and could not do for the landlord. The contract language stating that the operating expenses portion of additional rent would increase by a fixed amount of exactly 3% per year, notwithstanding the actual amount of operating expenses, was clear and unambiguous and clearly indicated that the tenant was correct its argument that the extra amount of operating expenses that the landlord asserted was in fact, not actually owed under the agreement’s express language.

Obviously, as a commercial landlord, it is frustrating and stressful when your tenant is not paying the full amount required under the lease both sides signed. Similarly, as a tenant, any time your landlord has filed a legal action seeking to evict you for unpaid rent, it is difficult and stressful, and never is that more true than when, under the terms of your lease, you don’t actually owe the unpaid rent your landlord has alleged. Whether you are a landlord or a tenant, and whether you are negotiating a lease or litigating the terms of an existing contract, count on the skilled South Florida commercial real estate attorneys at Stok Kon + Braverman to provide you with the legal representation you need. Our lawyers have been effective representation to our Florida landlord tenant clients for a very long time. Contact us online or by calling (954) 237-1777 to schedule your consultation and find out how this firm can help you.

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