Leasing Contract Clause-what does this mean? (lease, fees, sales, pay)

[Prehistory]

The tenant understands that this Lease shall be on a completely net basis .................................... including common areas which shall be paid in addition to the minimum rental, in each month, one-twelfth(1/12) of the estimated total of all sums made additional rent under the terms of the Lease.

So, does the paragraph above mean that tenant will pay the estimated additional rental monthly (1/12)? what would it mean if it was 1/6 or 1/20?

Thanks.

[harry chickpea]

I would want a re-write before signing. CAM is typically based on a percentage related to square footage of the individual store compared to all stores, and is NOT in relationship to the receipts of the business, but in relationship to the actual costs over the year. The company is trying to turn it into an extra income stream.

Good for you for reading before signing. Now go through again with a fine tooth comb and look for other little sneaky phrases and tricks. Measure out exactly the square footage of space you are leasing, watching out for dedicated exit hallways. Pay SPECIAL attention to maintenance of the roof and HVAC units and your remedies if landlord action isn't fast, complete, or effective.

Insert your own clauses like - rent shall be reduced to minimum rent for all days when there is an unrepaired roof leak, and landlord shall reduce the rent by the dollar amount of any and all water-damaged merchandise at retail price. Air conditioning and heating repairs shall be made promptly, with any minor repair taking more than 3 days after notification resulting in a complete rebate of rent for all affected days. Major repairs, such as replacement of an entire unit will result in a rent reduction to 50% of lowest rent until such repair is fully completed and fully operational. Lessee shall in no way be responsible for the cost of individual roof repairs or HVAC repairs except as the normal percentage assigned through CAM fees.

Make sure that there is also some remedy for incompetent basic CAM janitorial services. Landlords pay disgustingly small amounts for the service, and many of the janitorial services will skip days, leave dirty floors, and so on.

Remember that almost ALL of your power to affect things ENDS once you sign the lease. Be willing to walk, be willing to delay, be willing to make a fuss.

[Gary Siete]

A net lease means that maintenance (CAM) & additional fees are not included in the rent. I believe the 1/12th above means that you will pay these additional annual costs monthly.

I don't believe it is an issue above but in larger malls it is not uncommon for tenants to pay a % of sales. If a tenant only pays minimum rent, and % of sales doesn't kick in, then the landlord may not renew and will seek a better tenant who can generate more sales. Paying on % of sales is a sign of success.