Tenant Leasing Illustrated
January 2013
Issue #12

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Some of the fees under a lease can be downright criminal, but often of greatest concern are the landlord's hidden profit centers. For example, landlords generally require that tenants use third-party cleaning contractors engaged by the landlord, but many times these are affiliates of the landlord.

In this newsletter we examine six ways to protect yourself from exorbitant fees for cleaning in an office lease.

Alan Katz
Mintz & Gold LLP 


Use Our Cleaning Service and Nobody Gets Hurt


"You can't be half a gangster". That has been the tag line for this third season of "Boardwalk Empire", HBO's Emmy winning series starring Steve Buscemi about prohibition era Atlantic City.

Although the show felt a little off from the prior two seasons, it finished strong as Steve Buscemi's character, Enoch "Nucky" Thompson, went all Michael Corleone on his enemies and frenemies.

Besides all the wholesome television violence and sex, one of the most appealing aspects of the show is that "Nucky" is based on an actual historical criminal kingpin, Enoch L. Johnson. The same is true of many of the other characters, such as Al Capone, Meyer Lansky and Lucky Luciano.

This has led to my wasting much time with friends on a historically based guessing game regarding plot twists. You can figure out what happens to the historical characters; after all, the show cannot kill off Al Capone before his time (nor based on his past history, would we advise trying). But as for fictional characters, well, they should certainly watch their respective backs.

Far be it for me to segue into leasing by implying any connection between the Corleones and landlords but... there are certain aspects of leases that remind me of Don Fanucci as he squeezes young Vito Corleone for some of the action, imploring "you should let me wet my beak a little."

For example, cleaning is often included as part of the basic rent under an office lease (retail tenants are generally required to provide their own cleaning). Many owners require that the tenants use the building's cleaning service for standard cleaning and also for any cleaning that is additional to the standard cleaning. It certainly makes sense to have one cleaning service providing this service for both the common areas and the tenant spaces in terms of efficiency and economies of scale for the owner.

Yet tenants should recognize the inherent conflict in that today many owners own, have family members own or otherwise have a financial interest in the companies that have exclusive rights to provide cleaning services at their buildings. Yes, they wet their beak a little.

There is nothing wrong with a little built-in profit center for the landlord. As we have discussed in past issues, you do not have to scour your lease too hard to find that the same is true in other areas, such as electricity, overtime HVAC and escalations.

But tenants should be aware of the hidden profit centers in their lease so that they can limit the breadth of the provision and their potential exposure to unreasonable costs.

Keep your lease spic and span by covering the following in the cleaning provision:
  • Use your own contractor. Although rare other than in large leases, sometimes you may be able to obtain the right to use your own contractor. Normally, the contractor must be reasonably acceptable to the landlord and cannot create any conflicts (i.e., labor conflicts) with other building personnel. If you are able to obtain such permission, have the contractor pre-approved by the landlord.
  • Carefully review the cleaning specifications under your lease. These specifications indicate what services are included as part of your basic rent. You should ensure that the services are sufficiently comprehensive for your purposes and confirm what is defined as "extra" and not included in your basic rent.

    Remember that landlords are generally entitled to exclude unusually difficult work from basic cleaning, such as private bathrooms, below grade space and areas used for the preparation of food.

    Landlords also generally charge for the removal of any refuse not contained in customarily sized waste receptacles and for the removal of refuse known as "wet garbage".
  • Make sure the landlord's contractor is performing customary services at market rates. This matters because the landlord will pass along the common area cleaning costs in your operating expenses. In addition, most leases will require that you utilize the landlord's contractor for any additional or special cleaning services. In all of these instances, such services should be provided at competitive rates.
  • Require the ability to remove landlord's contractor for unsatisfactory performance. If the landlord's cleaning contractor is providing substandard service, you should have the right to replace it with an independent contractor.
  • Retain the right to use your own cleaning contractors on staff for extra work. This would include "on staff" day porters hired directly by you to perform special cleaning not covered by the standard work of landlord's designated cleaning contractor in the building.
  • Limit the access of the landlord's cleaning crews if applicable. Provide that cleaning personnel must perform their services after business hours so as not to disturb productivity.

    Certain businesses that regularly have personnel working past normal business hours (e.g., law firms) may want to require that landlord's cleaning personnel start later in the evening. Certain other businesses (e.g. banks and other financial institutions) may want to limit the landlord's access to certain "secure areas" containing sensitive information, but then cleaning in such areas will become the tenant's sole responsibility.
Follow these suggestions when negotiating your lease cleaning provisions so that, as we say at Mintz & Gold, you can avoid sleeping with the knishes.

Happy Holidays from Mintz & Gold!


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About Us


Mintz & Gold prides itself on providing the highest quality legal representation often associated with large law firms with the attention and reasonable costs of a smaller law firm.  Mintz & Gold's Real Estate Department has a national practice specializing in a broad range of commercial real estate law, with a particular focus on commercial leasing. We have extensive experience with respect to office, retail and shopping center leasing, and have represented major Manhattan landlords, national and multinational institutional tenants and national retail chains. Most of our attorneys practiced for many years at large institutional law firms before joining Mintz & Gold.

For more information regarding Mintz & Gold's real estate practice, click here.

For a list of representative transactions of Mintz & Gold's real estate group, click here.

For Mintz & Gold's website, click here.

Alan Katz
Telephone: (212) 696-4848
Fax: (212) 696-1231

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