When considering a lease of commercial premises,
a key factor to take into account is, which
party is to bear the cost of things like council
rates, land tax, building insurance and maintenance.
Those costs are generally known as “outgoings”
and the provisions of the lease should clearly
detail how responsibility for the payment of outgoings
is shared between the landlord and the tenant.
I’m John Gallagher, from Argon Law, and I
would like to tell you a little more about
the different ways that responsibility for
payment of outgoings can be dealt with in
commercial leases.
Outgoings are generally charged directly to
the owner of the premises by the relevant
charging authority or service provider.
So, when a lease simply says nothing about
the payment of outgoings, responsibility for
the payment of outgoings remains with the
landlord.
A lease which is silent like that, or which
specifically provides that the landlord pays
for all the outgoings, is often called a “gross
lease”.
At the opposite end of the spectrum, a lease
that specifically provides that the tenant
must reimburse the landlord for all outgoings,
is often called a “net lease”.
Now many leases fall somewhere in between
those two extremes. For example, a lease could
require that the tenant pays for rates, taxes
and building insurance but that
the ongoing costs of maintenance stay with
the landlord.
Remember, if a particular cost is not covered
by the definitions in the lease, it will generally
mean that the landlord can’t seek reimbursement
from the tenant.
So, if you have any questions about the interpretation
of commercial leases or any other aspect of
property law, don’t hesitate to contact
us at Argon Law.
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