Quick question for the group. Client occupies 60% of a building in Spokane, with 40% currently vacant (has been empty for 8 months). Landlord is still allocating 100% of the Avista electric bill to my client under their lease's "proportionate share" clause. The vacant space obviously has minimal utility usage - just emergency lighting and basic HVAC for freeze protection. Should tenant be responsible for utilities in space they don't occupy and aren't benefiting from?
Landlord Charging for Vacant Space Utilities - Legal?
Mike, this depends heavily on your lease language. Here in Tucson with TEP accounts, I've seen leases that specifically address vacant space utility allocation. Some require the landlord to absorb vacant space costs, others allow pro-rata sharing among occupied tenants. The key is whether the lease defines "proportionate share" as a percentage of total building space or occupied space only. What exactly does your lease say about vacant space?
Alan raises the critical point about lease definitions. In Memphis, I've successfully argued that "proportionate share" should only apply to costs that benefit the tenant. If the vacant space isn't generating income for the landlord and isn't being used, why should operating tenants subsidize those carrying costs? Look for any language about "beneficial use" or "occupancy" in your lease terms.
Thanks for the insights, Randy and Alan. The lease defines proportionate share as "tenant's square footage divided by total leasable square footage" with no specific mention of vacancy. But there's a clause about landlord maintaining "building systems for the benefit of all tenants." I'm arguing that vacant space utilities don't benefit my client and shouldn't be included in the allocation base. We'll see how landlord responds to that interpretation.