Secure Nine Important Tax Protections in Your Lease

One of the key economic questions any commercial lease must address is whether the tenant is responsible for paying real estate taxes on the property and, if so, how much. More often than not, tenants agree to accept tax liabilities, but because of the money involved, the issue is often hotly negotiated. And while every deal is different and generally reflects the bargaining power of the sides involved, consider seeking the following nine protections in any negotiation for tax allocation terms in the lease:

·         Whether tenant must pay taxes at all

·         Which taxes tenant is responsible for

·         What percentage of taxes tenant must pay

·         Tenant’s responsibility for tax increases

·         Which escalations tenant is on the hook for

·         How big an increase tenant is on the hook for

·         Whether tenant’s responsibility for taxes includes PILOTS

·         Whether tenant may contest property taxes

·         Whether tenant gets refund in event of successful contest

To find out why these nine protections are important and to learn how to draft a lease that includes them, see “Negotiate Nine Tax Protections in Your Lease,” available to subscribers here.