Mid-Atlantic Health Law TOPICS

One of the most significant expenses incurred by all health care providers is the rent that they pay for the space that they lease. A November 2002 decision by Maryland's intermediary appellate court, in Sy-Lene of Washington, Inc. v. Starwood Urban Retail, teaches tenants two significant lessons.

A. Careful Drafting

The first issue in Sy-Lene pertained to a lease that stated that "Tenant shall pay to Landlord $30.00 per month [a rate lower than the ordinary parking rate] for each employee parking space as is needed for its employees at the Premises." That clause went on to provide that "Landlord reserves the right to limit the number of employee parking spaces to be provided Tenant pursuant to this Article."

Curiously, the landlord asserted that the second part of the clause permitted the landlord to "limit" the number of discounted parking spaces to zero, and much to the surprise of the tenant, the appellate court in Sy-Lene interpreted the provision literally and agreed with the landlord. Of course, the lesson of Sy-Lene in this regard is that tenants should review their entitlements very carefully to make sure that they are spelled out precisely.

B. CAM Documentation

Most landlords impose additional charges on tenants to reimburse the landlord for the cost of maintaining the common areas of the property. However, tenants are not often provided with sufficient documentation respecting these common area maintenance (CAM) charges to assess their propriety or accuracy.

Although the tenant in Sy-Lene lost its argument in regard to discounted parking, it did win a separate argument about CAM documentation. More specifically, the tenant asked the court to compel the landlord to provide detailed documentation supporting the amount of CAM charges. The lease was silent on whether the tenant was entitled to such documentation, and the appellate court held that the tenant was, nevertheless, entitled to such documentation.

From a tenant's perspective, it is best to provide in a lease that the tenant is entitled to review invoices and other documentation supporting CAM charges. The level of documentation and whether the tenant will have the right to audit the CAM charges will often depend upon the size of the tenant's premises relative to the size of the building. However, it is helpful to know that, even if the lease is silent on the matter, the tenant still has the right to obtain back-up documentation regarding CAM charges.