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Floorage of rented premises – how should it be regulated in a lease agreement?

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It could seem that floorage of premises, to which a lease transaction refer, is an objective issue and it should not raise concerns – it is enough to enter the floorage in the agreement, make a local measurement and confirm its results in the handover protocol. Nothing could be more wrong!

First and foremost, at the moment of entering into a lease agreement there is no (at property projects, when an office or commercial building is still being built) or it is planned its advanced adaptation to the tenant’s needs. In such situations, the local floorage should be specified on the basis of the project. At the moment of giving the tenant a finished local, its real floorage may differ from a designed floorage. Generally, final floorage of premises is measured and communicated by a lessor, however, a tenant has a legitimate interest in its verification. Therefore, a lease agreement should contain appropriate legislations concerning a local measurement mode and legal consequences of possible differences in a real and designed area. Parties to the agreement have various solutions to the selection, frequently a percentage limit of acceptable changes is used and in case of exceeding this limit, a tenant does not pay an excess area rent. If a real local floorage is smaller than assumed, a local may be useless for an activity planned by a tenant and it forms, on the strength of code regulations, a ground for unilateral dissolving of a lease contract and full compensatory claims, unless contractual modifications of liability were introduced. Therefore, a reflection and accurate regulation of their mutual situation in case of differences in a local floorage, positive and negative, is in the interest of both sides.

 

The second important aspect is a local measurement method. With accordance to commercial local lease in Polish law, there is no effective measurement method. Generally, different Acts use various methods for their aims. Some unification of the practice will be introduced by a change of regulations, obligatory from 2012, as regards form and design of buildings, which dictates to use new Polish PN-ISO 9836:1996 norm to define and calculate areal and cubature rates in all buildings. However, if concerning a local floorage calculation – the norm is obligatory only in new built housing apartments. On the market of commercial buildings, the standards of international measurement floorage settled in, for instance BOMA (introduced by The Building Owners and Managers Association International) or TEGoVA (developed by European association of property valuers) – differ slightly from Polish norms, but they are preferred by foreign owners of commercial structures. Each of these forms gives a different result during the measurement of the same local, especially if it contains untypical elements, such as slants, shafts or terrace. Eventually, within the freedom of contracts, both lessor and tenant may specify optional different way of local measurement in the lease agreement, at which shopping mall operators aimed, who classify willingly local floorage to the area under the outside walls of the building bordering the local or under the thickness of partition wall with local neighbours. Conclusion? In case of freedom of choice, we have to choose wisely and consciously.

 

Another characteristic case for a non-voluntary lease in office or commercial buildings is so called Add-on Factor, which is an increase of local floorage for accounting aims by percentage factor (usually it is a few per cent). Therefore, there are some terms in lease agreements such as “net floorage of premises” and “gross floorage of premises” or other counterparts, which introduce a floorage increased by such factor as a basis of a payroll calculation. Thus, a tenant pays all charges calculated according to a rate per sq. m, not only from a real footage of his premises, but also from an “interest” in common areas of the building. In a perfect model, when all locals are rented in the building, the whole common footage is also rented together with them.

 

As seen above, knowledge of the rules and proper regulation of a rented local floorage is very essential. In a commercial lease, rate calculation and exploitative costs according to a rate per one sq. m of a local are standard in a commercial lease. Therefore, regulations concerning the area translate themselves directly into financial profitability of a lease for both sides.


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