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Message
Landlord Issue - Office Lease - Texas
Posted on 12/24/22 at 10:01 am
Posted on 12/24/22 at 10:01 am
I lease office space in the Dallas area. Landlord charges each tenant % of operating expenses based on square footage of leased space.
I just received a true-up for electricity charges of 10K dollars from the 2021 February Ice Storm. (They had indicated that in a March 2022 communication that they were litigating energy charges with the first version of the true-up/recovery reconciliation for operating expenses)
My monthly electric charge for the 4 years i've occupied the building has always been below 250 dollars. So this 10K bill is quite shocking.
Apparently, the landlord had a variable rate electric plan and when the electricity demand was peaking, the market rate for electric was 9,000/MWh.
It was never communicated to me that the landlord had a variable rate plan so I feel that put me and all the other tenants at a lot of downside risk without any communications of the risk we were assuming. Also, feel that they had a fiduciary responsibility to protect us as they are the one who handles electric provider/plan without any input from tenants.
I do plan to consult with an attorney. However, I was curious if anyone had any success in disputing this type of charge from landlords for Texas office space.
I just received a true-up for electricity charges of 10K dollars from the 2021 February Ice Storm. (They had indicated that in a March 2022 communication that they were litigating energy charges with the first version of the true-up/recovery reconciliation for operating expenses)
My monthly electric charge for the 4 years i've occupied the building has always been below 250 dollars. So this 10K bill is quite shocking.
Apparently, the landlord had a variable rate electric plan and when the electricity demand was peaking, the market rate for electric was 9,000/MWh.
It was never communicated to me that the landlord had a variable rate plan so I feel that put me and all the other tenants at a lot of downside risk without any communications of the risk we were assuming. Also, feel that they had a fiduciary responsibility to protect us as they are the one who handles electric provider/plan without any input from tenants.
I do plan to consult with an attorney. However, I was curious if anyone had any success in disputing this type of charge from landlords for Texas office space.
6
Posted on 12/24/22 at 11:02 am to kaaj24
I’d look for “commercially reasonable” language that qualifies Landlord’s services or op ex pass throughs and start there by arguing that variable rate plans were not market and you shouldn’t owe that. I would expect they’ll settle at a lower amount if you get an attorney involved, regardless of lease language.
Posted on 12/24/22 at 12:10 pm to kaaj24
Cam charges, lol. You’re screwed!
Posted on 12/24/22 at 1:20 pm to kaaj24
Does your lease prescribe a time limit for LL to come back with a reconciliation?
Yea no.
quote:
Also, feel that they had a fiduciary responsibility to protect us as they are the one who handles electric provider/plan without any input from tenants.
Yea no.
Posted on 12/24/22 at 2:18 pm to kaaj24
Variable rate is common and honestly cheaper over long periods. Just an odd event. Sounds like the landlord tried to mitigate as best he could but was forced to take the charge which he always passes on.
Posted on 12/25/22 at 11:12 am to kaaj24
Interesting issue Op. Out of curiosity does the landlord always pass on the exact charge? If so I gotta assume you are screwed here. In other words if the landlord charged you like an avg charge and the landlord saved/ benefited occasionally you’d have a cost/ benefit argument. How many other tenants are we talking?
Seems hard to believe this was discussed at some point? I thought I remember the variable plans sent out warnings to people they may have drastic increases? Were any tenants warned and just kept using?
Seems hard to believe this was discussed at some point? I thought I remember the variable plans sent out warnings to people they may have drastic increases? Were any tenants warned and just kept using?
Posted on 12/25/22 at 12:49 pm to kaaj24
quote:
they had a fiduciary responsibility to protect us as
Landlords aren't fiduciaries, so no, they don't.
It sounds like they already negotiated the bill down as low as possible themselves since the actual issue is between the landlord and the electric company. You can probably negotiate lower as another poster suggested, if you get a lawyer involved, but it's likely going to be well north of your normal $250.
Posted on 12/25/22 at 12:50 pm to baldona
An estimated cost for electric is charged monthly then true up each year based on actual charges.
My office space is about 1% of building, many other tenants, probably 40 tenants at least.
Due to the ice storm, event lasted about 4 days in Dallas, myself and other employees didn’t come in some days or only a few hours onsite a couple of days of the other days. Had no warning about excess usage charges outside of following year when the “preliminary” true up calculation was provided.
Most tenants and their employees were in the building minimally if at all due to storm/ice so I can only assume this was charges for HVAC and then any computer equipment that was powered on, etc.
We aren’t sub metered so it’s only based on square footage of leased space.
My office space is about 1% of building, many other tenants, probably 40 tenants at least.
Due to the ice storm, event lasted about 4 days in Dallas, myself and other employees didn’t come in some days or only a few hours onsite a couple of days of the other days. Had no warning about excess usage charges outside of following year when the “preliminary” true up calculation was provided.
Most tenants and their employees were in the building minimally if at all due to storm/ice so I can only assume this was charges for HVAC and then any computer equipment that was powered on, etc.
We aren’t sub metered so it’s only based on square footage of leased space.
Posted on 12/25/22 at 12:50 pm to baldona
An estimated cost for electric is charged monthly then true up each year based on actual charges.
My office space is about 1% of building, many other tenants, probably 40 tenants at least.
Due to the ice storm, event lasted about 4 days in Dallas, myself and other employees didn’t come in some days or only a few hours onsite a couple of days of the other days. Had no warning about excess usage charges outside of following year when the “preliminary” true up calculation was provided.
Most tenants and their employees were in the building minimally if at all due to storm/ice so I can only assume this was charges for HVAC and then any computer equipment that was powered on, etc.
We aren’t sub metered so it’s only based on square footage of leased space.
My office space is about 1% of building, many other tenants, probably 40 tenants at least.
Due to the ice storm, event lasted about 4 days in Dallas, myself and other employees didn’t come in some days or only a few hours onsite a couple of days of the other days. Had no warning about excess usage charges outside of following year when the “preliminary” true up calculation was provided.
Most tenants and their employees were in the building minimally if at all due to storm/ice so I can only assume this was charges for HVAC and then any computer equipment that was powered on, etc.
We aren’t sub metered so it’s only based on square footage of leased space.
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