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Common solutions for maintenance costs at commercial properties

On Behalf of | Jun 7, 2024 | Landlord Tenant Law

Facility maintenance can be one of the biggest financial obligations of any landlord. There may be substantially more maintenance requirements at commercial properties when compared with residential properties. Businesses may rely on large parking lots for customer access. They may also need customized, complex infrastructure, such as loading docks for commercial transportation of goods manufactured at the facility.

Maintaining those facilities is crucial to a company’s safe and successful operations. In some cases, business tenants do some or even all of the facility maintenance themselves at rental properties. Other times, they can rely on a landlord to handle most major maintenance matters.

Depending on the terms of a lease, there are several ways to address the maintenance costs and responsibilities at a commercial property. The following are the most common ways to address the need to maintain and repair any particular premises.

Addressing responsibility and/or costs

Oftentimes, commercial landlords expect tenants to maintain the premises on their own. Facility maintenance and repairs can fall to the business using the space, not the landlord who owns the property. A triple net (NNN) lease is an example of a commercial lease where the tenant assumes responsibility and expenses for all relevant maintenance and building costs.

However, requiring a tenant to cover those costs or handle maintenance matters might be unrealistic in many scenarios. Small retail establishments or insurance brokerages with three employees may not have the resources to handle facility maintenance. In such scenarios, landlords may pass those expenses on to tenants through common area maintenance (CAM) fees. As such, the landlord provides everything from parking lot maintenance and security to bathroom cleaning services, and the tenants all share a proportionate amount of those costs. Sometimes, a lease makes a tenant responsible for certain matters, while the landlord may charge for other maintenance services.

In all but the rarest of cases, landlords typically either pass actual responsibility for maintenance to commercial tenants or hold them accountable for the cost of facility maintenance. Negotiating terms that work for both a landlord and tenants alike is critical to the success of commercial lease negotiations. Maintenance responsibility and expenses are often among the terms that those parties need to negotiate before signing a lease.