In a commercial lease, the tenant may be required to cover a portion of the costs incurred for the operation, maintenance, and maintenance of the building when the lease so stipulates. These amounts are generally referred to as operating expenses or additional charges.
Depending on the nature of the building and the terms of the lease, operating expenses may include, in particular:
Common areas may include corridors, lobbies, elevators, stairwells, parking lots, and other spaces intended for the common use of the building's occupants. Expenses related to these areas may be included in the operating costs charged to tenants.
When a building has multiple tenants, the lease should specify the method used to allocate these expenses. The tenant's proportional share can, in particular, be calculated based on the proportion of their rented space to the total area used for this allocation.
Operating expenses may be payable monthly or according to another schedule stipulated in the lease . They may be billed based on an estimate and then adjusted once the actual expenses are known .
The lease may also allow the landlord to add management or administration fees to the operating expenses billed to the tenant . These fees may be calculated as a percentage of the expenses attributable to the tenant and added to their share of those expenses.
Particular attention should be paid to the composition of the expenses used to calculate these fees. Some expenses billed to the landlord by suppliers may already include their own management or administration fees. The tenant may then indirectly bear more than one level of administration or management fees for the same expense .
Special attention should also be paid to sales taxes . Some expenses paid by the landlord to its suppliers may already include GST and QST. When these expenses are then billed back to the tenant, it is important to verify how the taxes are calculated to determine if they are being applied to an amount that already includes the taxes paid to the supplier.
It is also important to check which expenses can or cannot be included in operating expenses. The lease may contain certain exclusions or limitations, particularly regarding expenses not directly related to the day-to-day operation of the building.
The tenant should therefore carefully check the definition of operating expenses, their method of payment, the expenses that can be included or excluded, administration fees, the method used to calculate their share, and how sales taxes are calculated , since these amounts can represent a significant portion of the actual cost of the lease.