Lease Service Charge Provisions

Leasehold agreements may outline the leaseholder’s obligations to pay service charges, which cover the costs associated with maintaining, repairing, and managing the property. These charges may include expenses such as building maintenance, insurance, utilities, and management fees.

Where a service charge is payable, the lease must be followed. Failure to comply with the lease could make the service charge unrecoverable.

Some leases are vastly better than others in relation to service charge provisions. Some have clear definitions, sections and sign posts making a property managers life very easy when hunting for information. Others will require a keen eye and attention to detail. Regardless extracting and interpreting the information contained in the lease is a vital first step in creating a service charge budget.

Because all leases are different there are no hard and fast rules as to where the necessary information may appear. It will change from lease to lease. Using the following as a checklist in your search will ensure you collect as much relevant information as possible.

What important service charge provisions can you spot in the lease excerpt below? Click on the Information icons to find out more.