Definitions
A landowner’s basic “carrying costs” are sometimes described as the DIRTI Five: Depreciation, Interest, Repairs, Taxes and Insurance. Costs can also include utility (electric, water, internet, phone, cellphone) services, trash and snow removal, capital improvements, and more.
Purpose
The purpose of this section of a lease is to establish how the Landlord and Tenant allocate certain costs associated with operating and maintaining a property. A Landlord might calculate these costs and seek rent sufficient to cover them. But this might not be realistic. Allocation of costs is also addressed in the section on Maintenance, Repairs and Improvements.
Example Text
These text examples (in italics) illustrate what you might include in parts of this section. Example text is not intended as “sample” or “model” language, or as “best practice.” You may copy and paste example text into the template, then modify it for your working lease document. Or you can learn from the examples in order to develop your own text.
Text box: Taxes, utilities and fees
- The Lessor agrees to pay all taxes and assessments associated with this parcel. Lessee agrees to pay all taxes and assessments on tenant’s personal property associated with the farming enterprise.
- Lessee agrees to abide by all local, state and federal laws and regulations and to apply for all applicable permits at his expense unless otherwise agreed by both parties.
- Lessee shall be responsible for payment of all taxes and governmental assessments that relate to the Leased Premises. Lessee shall also pay directly, when due, all other service bills, utilities charges, or other governmental assessments charged against the Leased Premises.