Challenge Year-End Building Expenses – It May Be Worthwhile

March 04, 2011

If you are a corporate tenant you should have your 2010 operating expense and real estate tax bills for your leased locations by now, if not you will shortly.  You might think that this bill is accurate because the landlord specified how these expenses would be calculated in your lease.  That may or may not be true.  More times than not, this bill will have errors but the burden of finding these mistakes is on the tenant.  Further, if the tenant does not challenge the expense, the tenant is typically deemed to have accepted the bill.  In my experience, the primary reasons for these mistakes are that the parties that negotiated the original lease and understand what was agreed to are not the same people doing the accounting and generating the operating expense and real estate tax bills; and most landlords mistakenly expense items that should be spread over a useful life.

So tenants, as soon as you receive your operating expense and real estate tax statement assume it is wrong, and read your lease to make sure you understand how to dispute the bills and the time frames you have to dispute.  Notice provisions are very specific with days to notify, days to conduct your investigation / or audit, where the landlord’s books and records are located to conduct your audit, days provided to detail specific objections,  and days to dispute or arbitrate.

If you would like help reviewing your statements and notice provisions to determine your rights, please call us.

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