“Approximate” Amount of Space Weakens Owner’s Position

If you give in to a demand by a tenant that you describe its space in the lease by a square footage amount, make sure that you don’t describe it as being “approximately” a certain square footage. That language could end up pinning you down to an exact amount. That’s because using the word “approximately” can cause you problems if the tenant later challenges your calculation of the square footage. A court could rule that you misrepresented the amount of space in the lease, and potentially could reduce the tenant's rent and operating expenses (or CAM costs) to reflect a lower actual square footage or force you to give the tenant rent credits.

EXAMPLE: An owner’s lease says that the space’s square footage was “approximately” a certain amount. The tenant sues the owner, claiming that it was overpaying its rent and CAM costs because the approximate square footage amount stated in the lease was higher than the actual square footage. The tenant demands that the owner return part of the rent and CAM costs it had already paid. The tenant claims that the owner misrepresented the actual amount of space. It also claims that it hadn't negotiated the approximate amount with the owner, but rather agreed to the rent based on that square footage. According to the tenant, it later learned that this amount was off by more than 1,000 square feet. If the case goes to trial and the owner loses, it would be devastating—probably hundreds of thousands of dollars in rent credits and deductions would be due to the tenant during the rest of the lease.

A better approach than stating an approximate square footage is to say that the square footage is “deemed” to be a specific amount. The word “deemed” shows that you and the tenant agreed to the amount regardless of what the actual amount is. Then, if the space turns out to be smaller than the agreed-upon size, the tenant won't be able to claim that you misrepresented the size. To “deem” the square footage for the space, include the following language in the lease clause describing the space: “For purposes of this Lease, the rentable square footage area of the Premises shall be deemed to be [insert #] square feet.

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