If a commercial property lease says that the tenant is to pay 100% of Outgoings:
(a) insurance;
(b) land tax;
etc.
Does that mean the tenant has to pay all the insurances the landlord takes on the property? So they pay the Landlord Insurance & Building Insurance? Correct?
Would that mean you get the bill then pay it then the tenant re-imburses you? Or you or the Real Estate Agent will give the bill directly to the tenant to pay?
What about Land Tax? Would the land tax bill be in the tenants name & they pay the bill directly? Or you pay for it then get the Real Estate Agent to charge the tenant?
Hi Superman,
Payment of insurances and all bills can be done in several ways,
a) my preferred way is to is to give the tenant an annual budget which covers your estimated outgoings and the tenant pays 1/12th every month. At the end of the year, you reconcile the account and either claim the balance from the tenant or repay the balance to the tenant; or
b) you can also pay the bills as they arise and seek reimbursement on an adhoc basis; or
c) you can have the tenant pay all the bills directly but you lose control of knowing what has been paid.
As to the outgoings included to be paid, it will depend upon what the lease calls for, it may nominate all of the outgoings or may nominate only certain outgoings eg strata levies, council rates, insurance, management fees…
The land tax bill is attributed to the owner not the tenant
Thanks for your comments Scott.
So if the lease just says the tenant is to pay 100% of Outgoings:
(a) insurance;
(b) land tax;
etc.
Since it just says "insurance", the tenant pays all the insurances that the landlord holds for that property. Meaning they pay the Landlord Insurance & Building Insurance, correct?
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