Commercial tenant has minor roofleak, wants mold abatement....
Investor · Mesa, AZ · Member since 2014 · 176 posts · 54 votes
Commercial tenant has minor roofleak, wants mold abatement....
5 Replies
- 9yRonald RohdePro MemberAttorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
Legal answer is---what does the lease say? Else whoever wants to pay for air quality test can rely on the results until proven otherwise...
@Casey Miles, It sounds like your tenant may have been jaded by their last landlord. Whenever I inherit a tenant, I always show a good faith effort. Ask them when they need and be attentive to that. Little things like re-striping a lot, upgrading ext lighting, fixing a sign go a long way in a new relationship.
I am assuming most of your communication with your tenant has been through email/text? I would show up onsite and ease their concerns by letting them know you are an attentive landlord. Communicate about the roof repairs. Maybe do this over lunch.
- Investor · Mesa, AZ · Member since 2014 · 176 posts · 54 votes9y
@Ash Patel, You're right about being jaded by the last owner. Shortly after closing I met with the office manager. The landscaping wasn't being done regularly, etc. I quickly got that addressed the day we closed. I'm now dealing with their facilities manager so it's probably a good idea to reestablish the relationship.
As soon as I get back home I'm going to have to reach out and do lunch. Thanks for the reminder that this is a relationship business as it is anything else.
As Ash said the tenant could be coming off of a bad relationship with the previous Landlord. My response would depend on who I thought I was dealing with. To me landlord tenant is different from a lot of business because it is an ongoing relationship. So you want to try and build a mutually beneficial relationship. With some that is not possible and the mold battle is the first of many battles and you may have to establish that you are not going to be pushed around. If you have already done the patch I would say I will be glad to remove the patch/open the wall back up and if there is mold I will pay for all expenses to abate the mold and restore the wall. but if there is no mold you will pay to re patch and paint. I don't want to sound jaded but I have dealt with a lot of tenants who love to spend a Lessor's money but tighten up fast when they risk having to pay if there is no issue.
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes9y
You need to check if it is mold or mildew. Either way the source of the leak needs to be eliminated.
For others looking to buy property it appears some due diligence steps might have been missed .
On a commercial property check to see if leases are triple net or gross leases. Even if triple net and tenants are obligated to reimburse expenses per the lease larger ticket items often you have to put on a payment plan as the tenants cannot pay all at once. This is generally truer especially for mom and pop tenants or regional versus national.
As part of due diligence a roof inspection with core sampling should have been completed. The roof inspection generally checks for leaks, remaining life expectancy of roof, if roof was installed properly, if too many layers exist on the roof. If too many layers on the roof then the property might not even meet county or county code compliance and not be insurable for a landlord property insurance policy.
The core samples generally look at any underneath layers, insulation, and decking. You might have a new layer on top or one too many and everything underneath is gone and needs to be taken out. This can be a difference between 50k roof overlay or going down to decking for hundreds of thousands in costs to replace.
The problem with leaks is the water could come in at a seam and then travel halfway across the building before going down into a unit. So without taking it all out it's hard to fix especially if substructure is not sound and working properly.
With the roof one solution before closing while in due diligence is to negotiate a seller credit to buyer at closing for the estimated cost conservatively to replace or repair the roof whichever is called for. Make sure the lender knows this upfront as they like to make the down payment more and mortgage less to finance to decrease risk on their side. You have to tell them you are keeping in reserve to do repairs to the property as they become needed. If property taxes are low upon resale taxes might go higher.
So getting an overall credit to cover old elevator if one that needs replacing, possible increase in property taxes for reassessment after sale, roof repair or replace, a/c and heating units replacements,etc.
With the roof check to see if there is a roof warranty and if it is transferable to buyer and the process and costs to do so. These are things that should be handled WHILE IN DUE DILIGENCE before closing on a property. Sometimes buyers overlook things on a purchase because price is low and after the fact find out things cost way more than anticipated which affects overall returns as capital injections suck away cash flow.
For mold or mildew there are surface and air tests.
No legal advice given.
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