Rent Provisions

Preferably a tenancy will be defined by the parties in a written lease or rental agreement. Careful consideration should be given to the rent provisions.

Amount

– Commercial leases

  • Gross lease – tenant pays only base rent amount
  • Net – pays additional amount, e.g. taxes
  • Double net – base rent plus taxes and insurance
  • Triple net – base rent plus taxes, insurance, and common area maintenance (CAM)
  • Quadruple net – base rent plus taxes, insurance, and common area maintenance, and utilities
  • Step-up clause – rent increases by a predetermined amount at predetermined intervals
  • Escalation – rent due escalates, generally computed by reference to a specific index

– If the escalation amount increase is not readily ascertainable the court may find the clause unenforceable because of indefiniteness Seattle First National Bank v. Earl, 17 Wn. App. 830, 565 P.2d 1215 (1977).

– Lease may have floors/caps on rent increases

  • Percentage lease – generally used in lease of retail space; tenant pays the landlord a percentage of gross sales

A lease should indicate the acceptable forms of payment. The due date should be specified and the lease should indicate that rent is payable in advance, without demand

Rent should payable without offset or deduction. Motel Enters. v Fast Ocean, Inc., 751 S.W.2d 114, 117 (Mo.Ct.App. 1988)(Landlord could terminate lease when tenant overpaid one month then underpaid another to compensate).

The lease should state the date that late fees accrue and define late fees as additional rent. However, courts may not enforce “additional rent” provisions.

A court considering the following clause refused to double the rent damages per statute allowing such damages.

‘Tenant agrees to pay for all charges for [utilities] . . . Provided, however, if such utility charges are billed to Landlord, Tenant shall pay Landlord’s charges, as additional rent . . .’

Here, the ordinary meaning of rent is enlarged by the parties’ agreement. No evidence is cited the Legislature intended a similar expanded meaning when it used the Term ‘rent’ in RCW 59.12.170.

First Union Management v. Slack, 36 Wn. App. 849, 679 P.2d 936 (1984).

The general rule is that where rent is paid or is payable in advance the tenant is not entitled to a pro-rated credit in the event of lawful termination of the tenancy during the period for which rent was paid in advance absent provision in the lease to the contrary. Sanders v. General Petroleum Corp. (1933), 171 Wash. 250, 17 P. (2d) 890; General Petroleum Corp. v. Harry Wright’s, Inc. (1932), 166 Wash. 636, 8 P. (2d) 291, 13 P.(2d) 1080; Rockwell v. Eiler’s Music House (1912), 67 Wash. 478, 122 Pac. 12, 39 L. R. A. (N.S.) 894; Dutton v. Christie (1911), 63 Wash. 372, 115 Pac. 856.

But this rule may not apply in cases where the landlord was at fault, such as constructive eviction cases or cases in which the landlord had no right to the advance rent under rent control laws. See, for example, Johnson v. Snyder, 99 Cal.App.2d 86, 221 P.2d 164 (1950); Lundsten v. Largent, 49 Wn.2d 40, 298 P.2d 488 (1956).

Posted in Lease Interpretation.

Leave a Reply

Your email address will not be published. Required fields are marked *