Question on LL Real Estate Taxes charged

Status
Not open for further replies.

stephen949

New Member
I have a restaurant (2060 sqf) which I signed lease with the landlord (LL). At the time of negotiation and the letter of intend (LOI) that both sides agreed on, the term for the Real Estate Taxes is "Pro Rate Share Estimate: $5.50 psf per year" (or $5.50 x 2060 = $11330.00 per year). The Real Estate Taxes had been included in my rent montly ~$944.00 ($11330/12) that I have paid montly. However, after the first year, the LL bill me another $16000.00 and point to this clause in the lease (see attachment below). The total came to about 2.5 times the original amount that both sides agreed on. If I know that is the total, I will not sign the lease in the first place. I feel that the landlord was misleading and dishonest regarding this section of the lease. What should I do? Please advice?

Steve



============================
TENANT'S SHARE OF REAL ESTATE TAXES--Tenant hereby agrees to pay its pro rata share of Real Estate Taxes as defined in Section 2.3 below.

Section 2.3 REAL ESTATE TAXES.

(A) Taxes on Tenant's Property. Tenant will pay before delinquency any and all taxes, assessments, fees or charges levied or imposed upon Tenant's business operations in the Premises and any personal property or similar taxes levied or imposed upon Tenant's trade fixtures, furnishings, equipment, decorations, stock in trade, inventory, contents or other personal property [collectively, "Personal Property"] and leasehold improvements located within or on the Premises.

(B) Definition of Real Estate Taxes. The term "Real Estate Taxes" means, for any "Tax Year" (defined herein) or partial Tax Year which falls within the Term, all taxes and assessments (special or otherwise), fees and/or charges levied, imposed or assessed against the Shopping Center (land, buildings, and improvements, as the same may be enlarged or reduced from time-to-time), and other taxes arising out of the use and/or occupancy of the Premises imposed by federal, state, or local governmental authority or any other taxing authority having jurisdiction over the Shopping Center (including legal fees and other expenses directly incurred by Landlord in contesting the validity of, seeking a reduction in, or seeking to prevent an increase in any such taxes or assessments). The term "Tax Year" means a twelve (12)-month period employed by the applicable federal, state, or local governmental authorities for the assessment and taxation of real property. Tenant agrees that Tenant will not contest the validity of, seek a reduction in, or seek to prevent an increase in, any such taxes or assessments, Tenant acknowledging that Landlord has the sole right to take such actions with respect to Real Estate Taxes. Real Estate Taxes also include any rent tax, sales tax, service tax, transfer tax, value-added tax, or any other applicable tax on rent, utilities or services herein or otherwise respecting this Lease, together with taxes imposed on the fixtures, machinery, equipment, apparatus, systems, appurtenances, furniture and other personal property (tangible or intangible) used in connection with the Shopping Center. Real Estate Taxes do not include franchise, capital stock, estate, inheritance, or income taxes personal in nature to Landlord.

(C) Calculation and Payment of Tenant's Pro Rata Share. Tenant will pay to Landlord, as Additional Rent, Tenant's share of Real Estate Taxes for any Tax Year or partial Tax Year which falls within the Term, as specified in this Section 2.3. Tenant's share of Real Estate Taxes will be computed by multiplying the total amount of Real Estate Taxes for any Tax Year or partial Tax Year which falls within the Term by a fraction, the numerator of which is the number of square feet in the Premises, and the denominator of which is the total number of square feet of space leased in the Shopping Center, less the square footage of buildings and other premises leased to a tenant of an Anchor Store or any other tenant in respect to which and to the extent Landlord has assumed and/or is burdened with said taxes in whole or in part. Landlord will estimate the Real Estate Taxes referred to in this Section 2.3 and Tenant will pay one-twelfth (1/12) thereof in equal monthly installments in advance, together with the payment of Minimum Annual Rent, beginning on the Commencement Date. In the event the aggregate of Tenant's installments during any Tax Year or partial Tax Year which falls within the Term are less than the amount of Real Estate Taxes due from Tenant, such deficiency will be paid to Landlord within ten (10) days after demand therefor. If the aggregate of Tenant's installments during any Tax Year or partial Tax Year which falls within the Term are more than the amount of Real Estate Taxes due from Tenant, such overpayment will be credited to Tenant's next installment of Tenant's share of Real Estate Taxes, or refunded if such overpayment is due in the last Lease Year of the Term. Landlord will provide Tenant with Landlord's calculation of Tenant's pro rata share of Real Estate Taxes upon request by Tenant.

(D) Increases. If any of Tenant's finish improvements, trade fixtures, alterations or improvements, or business machines and equipment located in, on or about the Premises (regardless of whether they are installed or paid for by Landlord or Tenant and whether or not they are affixed to and become a part of the realty and the property of Landlord) are assessed for real property tax purposes at a valuation higher than that at which other such property in other leased space in the Shopping Center is assessed, then Tenant will pay Landlord as Additional Rent the amount of Real Estate Taxes shown on the appropriate county official's records as having been levied upon the Shopping Center or other property of Landlord by reason of such excess assessed valuation.
====================================
 
Status
Not open for further replies.
Back
Top