Don't Rely on Prior Owner's Measurements

If you buy a building or shopping center, don't rely on the prior owner's space measurements when you set your tenants’ rent, warns Houston attorney John S. Hollyfield. You could lose a lot of money that way. Always remeasure each tenant's space, and then use your measurements to calculate the rent before you sign a new lease, he says.

Hollyfield has seen situations in which a new owner got burned by putting a prior owner's measurements into a new lease. The new owner got less rent than it could have asked for because the space was in fact much larger than the prior owner's measurement indicated. That was particularly disastrous when the new owner was locked into long-term leases, he says.

CLLI Source

John S. Hollyfield, Esq.: Partner, Fulbright & Jaworski LLP, 1301 McKinney, Ste. 5100, Houston, TX 77010-3095; (713) 651-5151