September 2013

Less Normal Wear and Tear

These five words can cost you plenty if you are not careful in your lease negotiations. These words are normally contained in the Lessee's Responsibility paragraph and may be further embellished in the Surrender provision. This simple phrase may create for both parties of a lease serious disputes. The reason for potential disputes is simple. There is no clear definition to the phrase "Less Normal Wear And Tear". How is it measured? It may be simple to measure normal wear and tear if it is a short term lease, but in commercial leasing the leases can be rather lengthy. Further, it is common for a commercial lease to provide options to renew the lease which makes it even further difficult to assess. 


I recommend to both parties of a lease to take pictures of the interior and exterior of the property prior to their occupancy and place those photos in a safe. Further, I recommend that the parties obtain roof and air conditioning reports prior to their occupancy to establish a base. All of these recommendations are rarely followed and the battles begin upon the surrender of the premises.

In the AIR Lease form there is a provision to have the current tenant contract with a maintenance company for the roof and HVAC. At least with maintenance contracts you should have some insight into the longevity of the main components of the property. My experience dictates that the person who represents the Lessee should also negotiate guarantees for roof and HVAC. It is quite common to have a carve out in the lease for the Lessor to maintain or absorb some portion of the roof costs which should provide some comfort for the Lessee. The HVAC is a more difficult item to have the Lessor maintain since the operation of the HVAC can be somewhat burdened by the operating hours of the tenant. The tenant who needs 24 hours of HVAC can burn out a system rather quickly. On the other hand, the tenant who operates a 9-5 business should also beware that operating life of HVAC can be as short as 5-6 years.

The one area that is also of concern for a single tenant buildings is the paving. Paving repairs and replacements are very expensive. Paving can be damaged easily by driving large trucks on hot days over the payment. Also, if you have a pot hole and it is not fixed promptly than water can seep under the paving and cause more wide spread damage. My only recommendation for paving is to keep up on its maintenance or you will be in for some serious costs down the line.

Your best plan of protection for all parties of a lease is to have your broker or legal counsel insert language that can provide you with best forms of protection. No one wants to lose their security deposit or be liable for tens of thousands of dollars of damage at the end of the lease.


“Lee Segal is an excellent witness in the area of commercial real estate leasing and development. He did an excellent job for us testifying at trial, was very credible, and came across as authoritative in his areas of expertise. He is very polished in his appearance, demeanor and testimony.”  
Robert D. Mitchell, Mitchell & Associates, P.C.