Real Property Tax Escalating in Commercial Condos

New York Real Estate Journal recently published an article written by Olshan Real Estate partner Thomas Kearns entitled “Real Property Tax Escalating in Commercial Condos.” “One key benefit in using a condominium structure,” he explains, “is that the real property taxes for the property are divided and separately assessed to each unit. Some thought and expertise is needed to draft property tax escalation clauses in space leases for New York City commercial condo units.” Some challenging examples, he notes, include for units not yet separately assessed or, similarly, for potential future condominium units, and cases wherein a tenant agrees to pay all taxes charged to the condo unit but the unit contains more than the tenant’s space."Tax escalation clauses," Mr. Kearns concludes, "need to provide flexibility for landlords and comfort to tenants that they won’t be gouged.”