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Loren, Lawyer
Category: Real Estate Law
Satisfied Customers: 28520
Experience:  30 years of real estate practice experience.
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I would like to know if the landlord is correctly

Customer Question

Hi! I would like to know if the landlord is correctly calculating the part I have to pay from insurance + taxes + water. My contract says that the proportionate share is 3% based upon a total of 19,490 of rentable square. Total square feet I rent
is 570 for my barbaershop.
JA: OK. The Real Estate Lawyer will need to help you with this. Have you consulted a lawyer yet?
Customer: No, not yet. I am researching first and if it is wrong then I will.
JA: Please tell me everything you can about this issue so the Real Estate Lawyer can help you best. Is there anything else the Real Estate Lawyer should be aware of?
Customer: I have the figures of the annual insurance, taxes and water
JA: OK. Got it. I'm sending you to a secure page on JustAnswer so you can place the $5 fully-refundable deposit now. While you're filling out that form, I'll tell the Real Estate Lawyer about your situation and then connect you two.
Submitted: 4 months ago.
Category: Real Estate Law
Expert:  Loren replied 4 months ago.

Good afternoon. I am Loren, a licensed attorney, and I look forward to assisting you.

The proportionate share for 570 square feet in a commercial structure with 19,940 sq feet is 2.92 percent. So, unless the lease provides that the proportionate share is rounded up to the nearest whole number, your share is slightly over calculated.

Customer: replied 4 months ago.
Hi Lauren, thanks for your help. The new mgmt company calculated 570ft * 3 = 1,720 to charge me. The previous mgmt company took a base year (2005) and calculated the difference between this year and 2005 and found the 3% of that. Whish one is correct?
Expert:  Loren replied 4 months ago.

What is 1,720 for?

Customer: replied 4 months ago.
They summed the real estate taxes, insurance and water and divided between the total sqft of the shopping center and then it gives $3 per sqft and then they multiplied my 570 sqft by 3 which is 1750. I think something is wrong.
Expert:  Loren replied 4 months ago.

If they are claiming operating expenses are 58,470 ($3 x 19,490 sq ft, then 2.92 percent is $1,707. Probably not enough of a difference to justify the time and expense of an audit.

You can, if the lease allows, demand to see the actual expenses in detail to confirm the charges.

Customer: replied 4 months ago.
Sorry. Maybe I didn't explain myself correctly. Let me give you 2015 numbers: Real estate taxes: 28,136.47. Insurance: 25,404.60. Water: 2,925.60. Subtotal: 56,466.67. Divided by GLA: 19801. This gives $2.85 per sqft. Barbershop sqft: 570. Subtotal: 570*2.85=1,624.50.
Is this correct?
Customer: replied 4 months ago.
However, see attached what they did some years ago. They calculated based on the base year: 2005.
Expert:  Loren replied 4 months ago.

Yes, your calculation is correct and they are over charging on the operating expenses per square foot.

Expert:  Loren replied 4 months ago.

Assuming there are no stops in the CAM and tax pass throughs, you are entitled to a credit, if you have already paid.

Customer: replied 4 months ago.
Loren, thanks again but both calculations are theirs, not mine. The attachment is the way the old mgmt company calculated: 744.98. The detailed numbers I sent you is the new bill I received from the new mgmt company for 1,624. Which one is correct?
Customer: replied 4 months ago.
The old one calculates the difference with a base year (2005) and then multiplies by 3%. The new one just sums all expenses, divides by GLA and then multiplies sqft by that.
Expert:  Loren replied 4 months ago.

What is the significance of the base year in the calculation? Why is it not just the total annual expense times your proportionate share? Why is the landlord reconciling expenses from 6 yrs ago?

Expert:  Loren replied 4 months ago.

CAM and other pass throughs are determined and calculated in accordance with the written lease. Does the lease have any limitations with regard to reconciling the expenses?

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