Commercial Lease Common Area Maintenance Expenses Can be a Costly Surprise

Commercial leases typically divvy up the costs for maintaining a building and property amongst the tenants. These costs are called common area maintenance expenses, CAM for short. Leases can be structured in many different ways, and the devil is in the details. Below are a few provisions to review closely to limit post-occupancy surprises.

1. Real Estate Taxes. Some landlords pay all real estate taxes, some charge all real estate taxes to the tenants, and others charge real estate taxes over a “base year.” For “base year” leases, tenants pay for any increases in real estate taxes that took place after the first year of the lease, which can be caused by changes in tax rate or assessed value. Tenants anticipating a base year structure in new construction or substantially renovated properties should negotiate for the “base year” to start after the property is reassessed to include the value of the construction.

2. Administrative and Management Fees. Landlords can charge administrative fees, which are typically considered the cost of receiving and paying the bills and other typical overhead. A typical administrative fee is 10% of the CAM expenses. The larger cost is management fees, which are generally 3-5% of rent, CAM, and insurance costs. Management of a property takes time and money – someone needs to hire and manage the landscaper, the electrician, the snow plow companies, and so forth, but tenants should understand how the fee is calculated and watch out for a management fee on real estate taxes, which usually do not require much effort.

3. Pro-Rata Share. A tenant’s share of the CAM expenses can be defined as the size of the tenant’s leased premises over the size of the total leasable area OR over the size of the total leased area. Those do not look much different, but they are. A pro-rata share calculated over the leased area allows a landlord to redistribute expenses from a vacant suite to other tenants, whereas a calculation over the leasable area requires the landlord to cover the expenses for vacancies. There are some expenses that may be fair to redistribute – water and trash removal – and others that may not – such as snow plowing that needs to be done regardless of the occupancy.

4. Controllable Costs. Landlords may agree to a cap on “controllable” costs. The word “controllable” is amorphous, and a general list of items included in that term should be stated. Landscaping and regular maintenance are usually considered controllable, snow removal and insurance are not.

For more information on these and other commercial leasing matters, please contact one of the Real Estate attorneys at Baker, Braverman & Barbadoro, P.C. to get the expert legal advice you need. – Kimberly Kroha.

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How To Prevent Elder Financial Abuse

Massachusetts General Laws define financial exploitation as the substantial monetary or property loss of an elderly person due to an act or omission of another person.  Financial exploitation occurs in the form of internet scams, forging signatures on checks, the illicit use of credit cards and the misuse of a power of attorney.  It also includes exerting undue influence over an elderly person to convince them to transfer assets or change his or her Will, Trust, Durable Power of Attorney or other estate planning documents.  In Massachusetts, elder abuse, including financial exploitation, is a crime, however it is often unreported and not discovered until the victim has passed away.  Elders tend not to report incidents of financial exploitation because they are fearful of retaliation, may have diminished cognitive or physical ability, or simply because they are embarrassed that they were taken advantage of.

The signs of financial elder abuse include, but are not limited to, the elder giving away property; the elder changing their estate plan at the urging of someone else; the elder spending time with a new “friend” and is paying that person in exchange for care; or bank account or credit card statements reflecting transactions that the elder either could not or would not have made.  Despite the perception that an elder is likely to be exploited by a stranger, it is more likely that a family member is the perpetrator of financial abuse.  Given the rise in opioid addiction, there has been a rise in Massachusetts of complaints of financial exploitation due to adult addicted children moving back in with their elderly parents or other elderly relatives.

It is important to protect yourself and your loved ones from becoming a victim of elder financial abuse.  There are a few steps you can take to protect yourself or your loved ones, such as: be aware of your finances or the elder’s finances, even if someone is managing the bills for you or the elder, check the credit card statement and bank statements, question any unusual or suspicious transactions; set up direct deposit for social security or other income; do not give out personal information, such as our social security number or bank account information over the phone; be wary of emails claiming a loved one is traveling and has been robbed or needs your financial assistance; and do not meet with a financial planner who you did not initiate contact with.

If you believe you or a loved one is being financially exploited, this should be referred to Elder Services and the police.  However, it is often the case that the financial exploitation is not discovered until after the death of a loved one because elders often to not report exploitation out of embarrassment or fear of retribution.  If you believe you or a loved one are or were a victim of fraudulent exploitation, contact Baker, Braverman & Barbadoro, P.C. to assert your rights. – Susan M. Molinari.

 

 

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