Be Careful and Diligent When Leasing Your Real Estate to

Be Careful and Diligent When Leasing Your Real Estate to the Government

The general services administration (GSA) leases more than 150 million square feet of space from private building owners in over 2000 communities. This makes them an extremely important player in the real estate community. Because of the unique terms and conditions contained in government releases, buyers of office buildings where the government is already a tenant basis the learning curve.

The number of potential conflicts between building owner and government tenant increase as the square footage under lease increases. Some investors assume wrongly that entering into lease agreement with the government is the same as a standard commercial lease.

The examples below the list rate some of the many unique terms and conditions in government leases back and have a big financial impact:

They use a standard tax escalation clauses stating that the amount of any increase in taxes about the first fully assessed year will be paid in a lump sum payment. Yet buried in the contract is a clause that requires the lessor to submit the tax escalation claim within 60 days of the tax payment date....