[RPPTL LandTen] Question on Capital Expenses

[Scott Frank]

Thanks for the answers so far. Please note that this is not a lease drafting question. My standard lease forms already account for this. 

I am just debating with my client over an existing lease at a property they are buying. My position is that if its not excluded its included (although gaap seems to indicate that the costs need to be amortized over useful life), but they insist that the capital expenses are excluded if they are not explicitly included. So I wanted to get your take to see how far off I am. 

Thanks. 

Sent from my iPhone

> On Sep 16, 2016, at 8:12 AM, David Weisman <David.Weisman at gmlaw.com> wrote:
> 
> I have often seen CAM including the annual expense of the capital improvement amortized over its useful life based upon a straight line depreciation schedule.
>  
> Another concept is to exclude them, except for amortized portion of capital improvements installed for the purpose of reducing or controlling Operating Expenses or complying with applicable Laws.
>  
> David  Weisman
> Board Certified Real Estate Lawyer
> Greenspoon Marder, P.A.
> 200 E. Broward Blvd., Suite 1800
> Fort Lauderdale, FL 33301   
> Phone 954-491-1120 Ext. 1015
> Direct Phone 954-343-6941
>  
> David.Weisman at gmlaw.com
> www.GMlaw.com
>  
> <image002.jpg>
>  
> From: landten-bounces at lists.flabarrpptl.org [mailto:landten-bounces at lists.flabarrpptl.org] On Behalf Of Law Offices of Scott A. Frank P.A
> Sent: Thursday, September 15, 2016 11:03 PM
> To: 'RPPTL Landlord Tenant Committee'
> Subject: [RPPTL LandTen] Question on Capital Expenses
>  
> All:
>  
> I am presently having a debate with a  client regarding capital repairs/replacements/improvements in a NNN lease for an office building.  The lease lists CAM components, with standard “includes but is not limited to . . .”.  But the list neither includes nor excludes capital expenses explicitly.
>  
> So do you think the Landlord can pass these expenses through?  And does your opinion differ if the expense relates to a capital replacement/repair versus a capital improvement?
>  
> As always, thank you for your input.
>  
>  
>  
> Scott A. Frank
> Attorney at Law
>  
> LAW OFFICES OF SCOTT A. FRANK, P.A.
> 5301 N. Federal Highway, Suite 170
> Boca Raton, FL 33487
> p:  (561) 826-5400
> f:  (561) 423-5721 
> sfrank at saflaw.com
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> <image003.png> 
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