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Loren
Loren, Lawyer
Category: Real Estate Law
Satisfied Customers: 34501
Experience:  30 years of real estate practice experience.
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Bakersfield CA. I have a question as to whether a commercial

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hello ...
JA: Where is the property located?
Customer: Bakersfield CA
JA: Has any paperwork been filed?
Customer: no
JA: Anything else you want the lawyer to know before I connect you?
Customer: I have a question as to whether a commercial landlord can charge a tenant both triple net (NNN) and HOA fees on a rental space?
Thank you for using JA. I am Loren, a licensed attorney for over 30 yrs., and I am here to help.
I appreciate your patience as I review your question. I will post my response shortly.
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Is there a written lease? Does is provide for the pass through of both the NNN and HOA fees?
Customer: replied 2 months ago.
There is no written lease yet. what does Pass through Mean in this case?
Customer: replied 2 months ago.
I like to discuss this in detail tomorrow over the phone also...
Pass throughs are are NNN expenses the property owner imposes on the tenant.
The pass throughs are just what it sounds like. The expenses charged to the landlord and then "passed through" to the tenant.
I am not sure how you could have a verbal lease that is not gross rent.
Customer: replied 2 months ago.
Its complicated. I own 1/3 of this building and currently I am 1/3 landlord. all 3 partners (including myself) leased the 2372 square ft to our other business which is a pharmacy. The problem is that the other 2 partners in the pharmacy are not performing according to contract and so I am thinking of selling my shares of the building (33.34%) (`$100K) and buy one of the partners shares of the pharmacy (33.33%) in trade....... today I told him that i am considering selling my shares of the building in exchange for his shares of the pharmacy. But i told him that I need to know what he will possibly charge me for base rent, NNN, HOA, tenant improvement amount .. He said he would charge base rent ($2.25/sf) plus NNN of 50 cents plus HOA fee (21 cents per square foot = $508 per month).... we are located in a complex, and I know that the HOA covers a lot of the same items (CAM, except property taxes), so why would i pay the NNN also...
Customer: replied 2 months ago.
basically after the change of ownership, I will be 100% owner of the pharmacy, and other two guys will be left with the building. One guy will have 33.33% and other guy 66.66%...but i will have 100% of the tenant pharmacy
You can not have a NNN lease that is verbal. The expenses in a NNN are not estimates. So, no, you can not double charge the expenses also covered in the HOA fees. The NNN pays an estimated sum each month and then there is a reconciliation at the end of the year, when actual expenses are known.
Customer: replied 2 months ago.
You are absolutely correct, makes sense. plan is eventually to sign a lease and this is part of the negotiation and due diligence process. I have had a landlord for one of my other pharmacies that had NNN lease where I paid it monthly in addition to the base rent, and at the end of the year, the charges were reconciled and I got a full report of the breakdown. SO in this case, it makes complete sense... can't double charge these expenses. .. I appreciate your help..
You are very welcome.
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Loren
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