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The Overburden of Additional Rent and Keeping Up With the Monthly Rent

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Tenants to a commercial lease should consider drafting a ‘rent catch-up’ clause, in the event that additional rent owed increases by a drastic amount.

The lease of SPoT Concord Place Cafe provided that additional rent was to be invoiced by the landlord in a timely fashion at the end of each year of the lease. Timely invoices allow the company to adjust prices/budget to accommodate any additional rent charges. The landlord failed to do this and invoiced the Cafe for 5 years of additional rent. A settlement was reached, but the cafe was unable to pay the rent in a timely manner after paying the settlement cost. The landlord terminated the lease for breach of the additional rent payment term.

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Take away:

  • Before entering into a commercial lease agreement, the tenant should ensure that the possibility of being overburdened with additional rent and monthly rent is minimized by inserting strict language around the amount of additional rent the landlord can charge per calendar year.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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Commercial Leases in the Agricultural Sector

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Commercial leases involving the lease of croplands may have various options for the minimum/additional rent clause.

An option a few landowners in the agriculture industry may take advantage of is flex rent. It is based on a formula that includes a base rent and weighting additional rent based on varying yield and crop prices. This means agricultural landowners may charge additional rent depending on how much crop the land produces (and sells for). On the other hand, lower crop prices can result in a reduced cash rent price.

Read the article here.

Take away:

  • Drafters of a commercial lease for cropland should consider all the options to their party and the fluctuations in the crop market when drafting the rent agreement.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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There’s Rent Prices, Then There’s Amenities Prices

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Business owners will often assume all commercial leases to be standardized agreements, therefore signing without reading. The tenant can be signing off on an increase of rent or expenses without realizing that commercial leases are not necessarily standardized agreements.

Additional rent can be expected if the tenant wants control of common areas in a building. This is known as a triple net lease, where the tenant pays all building common area expenses. The rental price per square foot may be stated in the agreement to stay fixed for the term, however, the agreement may not mention the status of the building common area expenses.

Read the article here.

 

Take away:

  • Parties to an agreement must ensure that they thoroughly read the agreement before possibly signing off on additional expenses they would otherwise have not agreed to

 

–  –  –

This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

What you don't know can hurt you! Subscribe to stay informed.

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