Posted by bill on January 21, 2009 at 13:13:55:
Thanks Kristine
I will try the letter route as you and the other poser both mentioned this.
The seller tried to set this up like a triple net lease but kinda messed it up. Once these leases are up, I will not write them like this again, I will build that into the rent. Not sure why he did it. So far no problems with the tenants knock on wood.
Do I have recourse - Posted by bill
Posted by bill on January 21, 2009 at 06:42:06:
I bought a smal office building in october. The tenants are required to pay property taxes per the leases. When we were at closing, the closing agent said no taxes would be prorated from the seller to me because the tenants paid them. At the time, that sounded correct to me and I havent thought about it again until now. I recieved the tax bill, split it in half and billed one tenant his half. The other tenant though did not move in until June 1st of 2008. I prorated the 7 months they were there and sent them their bill. Then it occurred to me that I was going to be stuck paying January thru May of last year since that half of the building was empty during that time. This comes to about $1300 that I guess should have went from the seller to me at closing. Do I have any recourse and if so against whom? I cant really bill me tenant for the full year since they were not there. Does title insurance or anything help with something like this or I am out of luck on this?
Re: Do I have recourse - Posted by Dave T
Posted by Dave T on January 22, 2009 at 10:59:20:
Triple net leases work well for financially sound tenants on a long term lease (like ten years).
If your tenants are shorter term (one or two years), or new startups thay may not even survive the first year, then get as much as you can in basic rent and pay the taxes/insurance/maintenance yourself.
Re: Do I have recourse - Posted by Kristine-CA
Posted by Kristine-CA on January 21, 2009 at 12:57:09:
When you buy property with leases/tenants, you want to look at the
entire picture of what’s been collected or not in terms of rents,
deposits, etc. In this case, both you and the escrow officer overlooked
the vacancy and did not include property tax credits due you from the
seller.
If it were me, I’d send a letter to both the seller and the escrow/title
company, letting them know there was an oversight and that the empty
unit’s tax share should have been prorated. And that you’d like to be
reimbursed for the taxes due prior to your ownership. Follow up with a
call. Sellers have a way of disappearing after the deal is done.
Is it typical to have the tenants pay property taxes on commercial
property? Seems risky to me. I’d want to be the one paying the taxes
and build that expense into my rents.
Send the seller their part of the bill - Posted by Rich-CA
Posted by Rich-CA on January 21, 2009 at 07:06:27:
They should have disclosed that since it was something they knew they owed. I would draft a polite request that they pony up the amount due. If they refuse or reply that its your problem now, I would then escalate the verbiage of the letter. Perhaps get an attorney involved, possibly go to small claims court.