“Operating Costs” means the aggregate of all direct and indirect costs, established in accordance with this Lease, incurred or charged by or on behalf of the Landlord on account of the ownership, administration, operation, management, supervision, maintenance, repair of and replacements to the Property including, without duplication or limitation…….
It all seems innocuous to a person not familiar with commercial leases.
We’ve identified 8 words that may increase financial risk for tenants. Here’s a breakdown of words that may increase financial risk for tenants, each with a brief explanation:
Aggregate: Refers to the total of all costs, which allows for broad inclusion and may sweep in unexpected or undefined expenses.
Direct and indirect: “Indirect” costs are especially vague and can encompass items not tied directly to day-to-day operations, like management overhead or corporate allocations.
Incurred or charged: This phrasing means the tenant may be responsible for costs even if the landlord hasn’t paid them yet—just being billed or accruing them is enough.
On behalf of: Allows the landlord to pass through costs that a third party incurs but that benefit the property, which may be outside the tenant’s control or oversight.
Ownership: Costs related to “ownership” could include capital items, legal fees, or financing costs, which tenants typically try to exclude.
Supervision: Subjective term—can include salary or consulting fees for individuals overseeing services, even if redundant or loosely defined.
Replacements: Replacing building components could mean significant capital expenditures being charged to tenants, unless limited to minor or non-capital items.
Without duplication or limitation: “Limitation” being absent means the list of costs is not exhaustive, opening the door to additional, unforeseen charges.
Each one of these words expands the scope of tenant obligations in potentially costly ways.
When we review leases as part of our Lease Wording Negotiation Service we watch for things like this and look at the lease from a business perspective. For example, in this clause we typically add up to 44 deletions and exclusions from what a landlord can charge our client for Operating Costs. Ask about our Lease Wording Negotiation Service before you sign a Lease.
For more ways to create a more balanced lease get The Lease Equalizer. This is not a textbook or legal manual. It’s a tactical resource built clause by clause—designed to help tenants across all property types understand what they’re agreeing to, spot the hidden risks, and consider balanced alternatives. In each entry, you’ll find a typical landlord-drafted clause (drawn from real leases), a plain-language breakdown of what it means, a suggested tenant-balanced rewrite, and practical tips for pushing back—whether your space is 1,200 square feet in a strip mall or 120,000 in a fulfillment center.