How Much Is My Rent?

Your  lease states, under a paragraph called "Rent" that you  are
to  pay  a sum of money to the lessor once a month, on the  first
day  of each month during the term of the lease.  Is that all  it
costs you to "rent" the location from your lessor?

Look  further  under  the lease.  You will see  phrases  such  as
"Operating  Expenses" or "Maintenance, Repairs,  Alterations  and
Common  Area  Services", or "Liability Insurance  -  Lessee",  or
"Property Insurance" or "Real Property Taxes".  A number of words
will  follow each one of these phrases, defining what  is  meant,
but  not setting forth a specific dollar amount.  If you want  to
understand  the nature of each one of these charges or  potential
charges,  you  need  to ask questions of your lessor,  preferably
before  you  sign  the  lease.   If  you  don't  understand   the
phraseology  of  the  lease, you need to retain  an  attorney  to
assist you, so that he can explain the terms of the lease to  you
and ask the proper questions on your behalf.

If  you  intend to be successful in the business of  operating  a
laundromat, you need to have a careful understanding  of  all  of
your costs of operation, including the various charges which  can
be imposed upon you through your lease.

These  are difficult economic times.  Last month, it was reported
that  Clothestime,  Inc.,  a discount apparel  chain,  filed  for
Chapter 11 for protection in the U.S. Bankruptcy Court.   It  was
reported that about 140 of the chain's 550 locations will be sold
or closed as the Orange County company reorganizes.

It  was  also reported that mortgage delinquencies, in the  third
quarter  of  1995,  rose to the highest level in  more  than  two
years, while consumer borrowing passed the one trillion mark  for
the first time in October 1995.  The Mortgage Bankers Association
of  America  reported that the delinquency rate in mortgages  was
the  highest  during the third quarter of 1995 since  the  second
quarter of 1993.

In  order  to  make  sure that your business enterprise  survives
rather than fails, you need to carefully understand the nature of
the  expenses  that  will confront you when you  enter  into  the
business, and carefully monitor your expenses thereafter.

When  considering  the  acquisition of  a  laundromat,  have  you
examined  the utility bills?  Sewer usage charges are imposed  in
the  City  of  Los  Angeles through statements  rendered  by  the
Department  of  Water  and  Power.   Other  locations,  operating
through  independent water companies, may or may not incur  sewer
usage  charges  through a water bill.  In some situations,  sewer
usage charges are to be found under the property tax bill.



Lessors who discover water sewer usage charges imposed upon their
real  property tax bill will customarily be careful to set  forth
the  lessee's obligation in this regard under the lease.  Lessors
will,  as  a  matter of caution, pass along as a  charge  to  the
lessee  any obligation which vaguely touches upon the subject  of
water.   One  lessor, for example, quoted his real  property  tax
bill  and  provided as follows: "Lessee shall be responsible  for
the  cost of all water used on the Premises, including,  but  not
limited  to, any changes by governmental authorities,  including,
but  not  limited to, any sewer usage charge, mosquito  abatement
fee, water stand-by charge, flood control charge and similar type
charges  which appear on the Joint Consolidated Annual  Tax  Bill
for the Premises."

Do the common area maintenance expenses to which you contribute a
proportionate share include administrative fees?  Some  of  these
fees  are  entirely legitimate and are incurred  by  lessors  who
employ  secretarial  and  bookkeeping services.   Other  lessors,
however,  do little in the way of administration, but nonetheless
impose substantial administrative fees upon their tenants.

The  only  way to properly protect yourself is to carefully  read
and  understand  your  lease,  preferably  with  the  aid  of  an
attorney,  before you take pen in hand.  After the signature  ink
has dried, your negotiating leverage will also have dried up!

[This column is intended to provide general information only  and
is  not intended to provide specific legal advice; if you have  a
specific  question  regarding the  law,  you  should  contact  an
attorney  of your choice.  Suggestions for topics to be discussed
in this column are welcome.]


Reprinted from New Era Magazine
Myles M. Mattenson © 1996-2002