Can the landlord charge me for a utility increase if my utilities are included in my rent?

This is what my commercial lease says “Landlord shall pay all charges for water, sewer, garbage and recycling, and electricity on the Leased Premises during the term of this Lease. Utility use shall be reviewed after the I st year in order to accurately determine tenant average monthly use. Any utility rate increases instituted by the utility companies shall increase the utility cost proportionally.” Do I have to pay the difference on any increases?

Asked on March 14, 2011 under Real Estate Law, Oregon

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

For a definitive answer, you would have to bring the lease to an attorney who can evaluate the whole  thing (often, one lease term affects another) in context for you. That said--and not as a definitive legal opinion about your situation, but responding only to out of context language you quote--it seems that they could pass on any costs to you. You write that "Any rate increases instituted by the utility companies shall increase the utility cost proportionately"--that seems like a clear-cut statement that rate increases may be passed on to you. So if, for example, 20% of your rent is effectively utilities, if there is a 4% rate increase, that 20% should be increased by 4%. If the lease doesn't delineate what amount or % of rent is for utilities, then there may be factual issue and grounds for dispute as to what is the "utility cost" that may be increased proportionately; but in theory, it would seem that whatever that cost, it could go up in with an rate increases.


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