SERVICE FEE CLAUSE
Q.1. What is the Service Fee Clause?
Q.2. Why is the Service Fee Important?
Q.3. How is the Service Fee calculated?
A.3. These are the steps used to calculate the quantified sum:Sum the total expenses and total lettable space for each park.
Determine an expense per m² for each park based on the total expenses and lettable space.
Apply the expense per m² to the size of individual parcels to determine the annual service fee as per terms of lease.
Divide the annual sum by four to arrive at a quarterly sum.
If the total maintenance expenses for fiscal for a park are $100,000.00 and the total lettable space is 50,000 m², then the expense per m² for the park is:100,000/50,000 = $2.00 per m²
If a tenant’s parcel size is 1,000 m², then the annual service fee equates to:
1000 X $2.00 = $2,000.00
And the quarterly charge: $2,000.00/4 = $500.00
Q.4. What is required to prevent a breach of this Clause?
A.4. Once they Tenant pays the Service Fee/Charge, then he will not be in breach.
Q.5. What happens if this Clause is breached?
A. 5. If this clause is breached then the Tenant will be in arrears and therefore financial breach of the Lease and/or leasing arrangement. This will entitle the Landlord to take steps to recover the amount which is owing, by either a demand for payment or a pre-action letter or even by the process of distress. It is important that the Tenant understands that this payment assists in the overall operation and maintenance of the Park, failure to pay not only affects the individual Tenant but all other occupants of the Park.
Service fees are recoverable as rent and the non -payment of service fees is a financial breach. As such the same remedies available to the Landlord for the non-payment of rent are available to the Landlord for the non-payment of service fees.
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