Does Your Lease Have a Pass-Through Clause?

Does Your Lease Have a Pass-Through Clause?

If you’re renting, you may feel like once you’ve found an apartment or house for the right price, your work is done. However, if you really want to save money, you’ll take the extra step—going over your lease with a magnifying glass. The easiest place to save yourself some money is by eliminating your “pass-through clause,” a paragraph that allows a landlord to raise your rent to cover additional taxes, and, sometimes, expenses.

Check Out Your Definition Of “Rent”

In your lease, you’ll find a definition of “rent” as the amount of money you’ll have to pay, usually monthly, to hire the premises from your landlord. In many standard leases, though, there’s also something called “added rent,” which is extra rent a landlord can be entitled to charge you.

There Are Generally Two Situations For Added Rent

Those situations are: 1) If you damage the property; 2) If the landlord’s expenses go up. You can control whether you damage the property, and I suggest that you control the second situation as well by negotiating your lease to take out the “pass-through clause.” That’s the clause that allows added rent to be charged if the landlord’s expenses go up.

Here’s What One Might Look Like

You might see a clause like this in your condo lease: “Tenant shall pay to Landlord, as added rent, all increases in Common Charges, Association Dues and Real Estate Taxes related to the condo unit, which exceed those charges, dues and taxes payable on the commencement of the lease.”

Here’s What To Say

“I really like the place, I think we’ve negotiated a fair rent, and I will take care of the property like it’s my own. But, I’m on a budget, and I can’t afford to take on the responsibility of paying for future common charges or taxes.”

What Should Happen

All real estate is local, of course. However, in many parts of the country, it’s a soft market: The 2009 vacancy rate of 8.4% was the worst in fifteen years, according to real estate data firm Costar. Many landlords will agree to strike this clause if you simply ask.

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