Contributed By McGuireWoods LLP
Unless a particular service or utility exclusively serves a particular tenant’s premises, the provision of services and utilities to multi-tenant facilities is typically the obligation of the landlord. However, the means in which the costs of these services and utilities are paid depends on the nature of the lease. In a gross or full-service lease, the landlord provides and pays for all services and utilities, and the tenants pay only the base rent. In a “triple net” lease, the landlord will provide common area utilities and building-wide services, the costs of which are reimbursed by the tenants in proportion to their square footage. Tenants typically pay for their own premises-specific services, although this can also be negotiated.
Landlords may also provide utilities directly to a tenant’s premises, including electricity, plumbing and HVAC service, the costs of which are also reimbursed by the tenant. These reimbursements may be made on the basis of a tenant’s square footage, but in cases where these services are separately metered, or where the landlord deems that a tenant’s use is unusual or excessive, then the tenant may be required to pay based on its actual usage, or in some other manner. Similarly, in some cases (most commonly in large multi-tenant office buildings), landlords will often limit the provision of certain services to regular “business hours”, and charge additional costs for after-hours usage, especially for HVAC.
Telephone, internet and other similar telecommunications services are often obtained and paid for directly by a tenant, given that each tenant often has particular or specific needs. Tenants often have their own telecommunications systems installed at their own expense (including cabling and wiring, which must often also be removed at great expense) and will contract directly with the appropriate service providers.