Management and Administrative Fees ©

Do you pay a management fee or an additional supervisory/administrative fee when the lease does not specifically call for one? What if the Lease states that the tenant is to pay all costs associated with ‘maintaining and operating the common area’ but no specific fee is mentioned? Courts have ruled in some instances that such a fee, if not specifically allowed, is not proper as the Landlord’s expenses in overseeing maintenance work performed by others is simply one of the costs of operating a shopping center, for which they are compensated for by the collection of rents, thus no additional charge shall be allowed. Cafeteria Operations, L.P. V. Coronado-Santa Fe Associates, L.P., 952 P.2d 435 (N.M.App. 1997). Courts have also ruled that a payment of an additional management fee to an affiliate of the Landlord for predominantly non-common area services is not allowed even when the lease specifically states that such costs are determined in the sole discretion of the landlord. Clear Lake Center, L.P. v. Garden Ridge, L.P., 416 S.W.3d 527 (Tex.App.-Houston [14 Dist.] 2013).

The court rulings are not absolute, and it is extremely important when determining whether management fees and supervisory fees are proper to examine case law in your local jurisdiction. In some instances courts have ruled that an additional management fee on top of the fee prescribed in the lease may be proper as long as such fees directly relate to the common area. McDonald’s Corp. v. Goler, 560 N.W.2d 458 (Neb. 1997).