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Updated over 3 years ago on .

User Stats

125
Posts
29
Votes
Khaled Seirafi
  • Investor
  • Orange County, CA
29
Votes |
125
Posts

Property Tax Cap for New Commercial Tenant & Thinking of Selling

Khaled Seirafi
  • Investor
  • Orange County, CA
Posted

My family's owned a mix use building in San Mateo, CA for close to 40 years now and we have a potential commercial tenant looking to fill our last vacancy. Now these tenants are trying to negotiate property tax and insurance caps, while we've said that we're only agreeing to a NNN lease. The issue is that if we decide to sell, I expect the new owner's property tax bill to jump anywhere from 2 to 3 times our current property tax bill. So the tenant's share of property tax would jump from around $250 to $500-$750 per month, which is quite a significant jump. I know that this is why most tenants would negotiate for a cap, however setting a cap (for insurance and maintenance as well) would also take away from the property's value come time to sell. I'm trying to not screw over the tenant if and when we decide to sell, but trying to look out for our interests as well. Any words of thoughts or words of advice?