Generally, the term additional rent is used in the commercial real estate to describe the cash flows which is known as rent-like, from tenants that are not the part of traditional base rent. In the retail settings, especially places like shopping malls, these means the inclusion of percentage rent and various recoverable expenses.
Generally additional rent items are used in all the commercial leases to deal with the costs which are shared by the multiple tenants. For instance, in the shopping mall the cost of paying real estate taxes, cleaning the common areas or even repaving the parking lot is generally shared among all the tenants. The cost is generally divided and based on an individual tenant’s "proportionate share", mainly calculated by dividing the tenant leased square footage by the whole area of the building. Sub-areas are also no exception for handling costs shared among a sub-group of tenants, like cleaning food-court which is known as more expensive and shared among a smaller group.
Additional rent also means all sums except the base rent that the tenant needs to pay the landlord under a lease. A tenant must be liable and shall pay all the sales, use taxes, all rental except the income taxes measured by rent. Base rent and recurring monthly charges of additional rent shall be due and payable that too in advance on the first month of the term. Moreover, the tenant must pay the first monthly instalment related to additional rent expenses and taxes during the execution of the lease. At this point, the tenant also needs to pay the rent of all items on or before 30 days after the landlord provides the bill. Rent must be paid to the entity, sent to the address. On the other hand, rent for any partial month during the term should be considered. No statement or endorsement on the check or letter accompanying payment shall be considered an accord and satisfaction. Tenant covenant to pay rent is now considered as independent of every other covenant of the lease.
Each year additional rent differs from one to another. The reason is the fluctuating costs associated with managing a complex or a building- based on the math calculated by the landlord. Here the cost is proportional to the tenant use of the building or even depends on the size of the tenant unit. And there are several categories that the cost passed on to the tenants-
• Property taxes
• Parking maintenance
• Landscaping and snow removal
• Utility costs
• Maintenance cost
• Exterior maintenance etc.
Each tenant will get the perfect proportioned share of above-mentioned costs that they must pay along with the monthly rental costs.
