How to Address Snow Removal Services in Lease and Contracts
Effectively managing snow and ice accumulations is a critical component of maintaining commercial properties in a safe condition. Whether you're the owner of a large commercial property with sufficient in-house personnel and the appropriate equipment necessary to do your own snow removal, or you own a smaller property and must hire an outside contractor to perform this service, your lease provisions should specify who's responsible for the many aspects involved in snow and ice removal services—you, the tenant, or both.
Depending on the snow removal terms in your leases, you may have to—and prefer to—provide all the snow removal services for your property. You can negotiate for the costs to be passed on to tenants as CAM charges, but be prepared for tenants to push back against snow removal charges they feel are too expensive, especially if they ever have cause to complain about the service.
To keep your property well maintained, reduce your liability for snow-related slip-and-fall accidents, and keep your tenants' businesses running smoothly during winter, we'll tell you what you need to know about hiring a good snow removal contractor. We'll also show you how to draft lease terms that specify your and your tenants' snow and ice removal obligations.
Choose Appropriate Contractor
If you're hiring a snow removal contractor yourself, you need to pick one that will help ensure that driveways and entrances remain unobstructed, sidewalks and pathways are safe to walk on, and there are ample parking spaces available at your shopping center, strip mall, or office building.
But accomplishing all this without blowing the property's annual maintenance budget is harder than it may seem. Knowing what to look for in a good snow removal contractor, and how to negotiate the best service contract, are important skills for you and your property manager to master, says commercial real estate expert Kevin M. Fogel. It's not enough to find the cheapest contractor, as that can have unintended and very expensive consequences in the long run, he advises. The best contractor is one with the proper amount and type of snow-handling equipment, a sufficient quantity of well-trained personnel, and adequate experience servicing your type of property, according to Fogel.
Equally important is finding a contractor that understands the common problems that occur during snowfalls, ice storms, and refreezing, and appreciates the adverse effects that can have on a commercial property, its customers, and its owners and managers. “Properly servicing the property will result in happier tenants as well as avoiding or reducing slip-and-fall accidents and the financial risks of lawsuits,” Fogel notes.
Poorly managed snow removal can quickly turn into a nightmare, resulting in impassable driveways, vehicular jams that tie up traffic flow across the entire property, inadequate parking spaces, delayed openings for office workers and retail establishments, physical damages to the property, overcharges, and other inconveniences.
Therefore, look for a contractor that:
Is the right size for your needs. “It's a good idea to visit its business office and dispatching center in advance of signing a contract to ascertain the size and scope of its operation,” Fogel recommends. Find out whether it consists of one part-time employee using a laptop computer from his apartment, or a large-scale team approach with some people continuously tracking various weather reporting services, others watching the news broadcasts, and others dispatching the vehicles, all in harmony, he stresses.
Has enough vehicles to cover its service area by itself. Some contractors may intentionally take on more accounts than they could ever adequately service just to collect referral fees by farming out the excess work to other contractors. It's important to know in advance exactly what company will be performing the services covered under the contract. “Besides, waiting a long time for a plow to arrive because the contractor has run out of vehicles, or because one has broken down, will adversely affect the safe operation of the property and cause much frustration,” warns Fogel.
Larger contractors will have experienced supervisors who routinely check up on their crews' performance and keep written records as the route is inspected. Ask if the company has any mutual-aid agreements with fellow snow removal contractors that will supply vehicles and manpower to meet any unexpected shortfalls that occur.
Has insurance. Make sure that the contractor has adequate liability insurance and coverage for damages to vehicles on the property, that you get named as an “additional insured,” and that it provides you with a “certificate of insurance.”
For items that should be included in every snow removal contract, see Require Certain Terms for All Snow Removal Contracts.
Specify Your Snow Responsibilities in Lease
Confusing snow removal situations can lead to frustration, disputes, injuries, and reduced sales—especially during the holiday season—which can adversely affect percentage rents, as well as strain owner-tenant relations, Fogel warns.
Such confusion often ensues when each tenant is responsible for providing its own snow removal service. That's why many owners prefer to keep control of this aspect of property maintenance. Ask your attorney about using this Model Lease Language in provisions that obligate only you to provide snow removal services at your property:
Model Lease Language
Landlord agrees to maintain the Parking Lot for the benefit of all Tenants, including [insert tenant negotiating lease]. Such maintenance will include [insert services, e.g., repairs, striping], and removal of snow and ice according to these terms and conditions: [insert terms and conditions of snow removal, e.g., which areas will be plowed, the minimum snow accumulation amount before plowing, sanding/salting, and/or shoveling will begin, if the plowing will begin automatically or only upon request from the owner/manager, times that the plowing will be done, etc.].
Like our Model Lease Language, yours should be as detailed as possible. While some leases include “removal of snow and ice” in the definition of CAM that will be provided by the owner, or “Landlord shall furnish to Tenant, as part of the rental consideration snow removal, when required, to provide ready access to the Premises,” that can open the door for interpretation of what services, exactly, were adequate. If a tenant argues that an injury occurred from a slip-and-fall on ice, it could argue that “removal of snow and ice” obligated you to fix the specific condition that caused the fall. On the other hand, if you list your exact responsibilities in the lease and the cause of the fall isn't your responsibility under those terms, you could be off the hook.
Similarly, beware of simply stating “Landlord shall be responsible for removal of snow and ice from the shopping center,” or “Landlord agrees to maintain the common areas for the benefit of all Tenants.”
Make Tenant Responsible for Removing Snow
If you decide to require the tenant to provide its own snow removal services and hire a contractor to do so, negotiate in your lease for the right to approve any prospective snow removal contractor before the tenant signs a contract with it. Make your approval of the contractor “to Landlord's sole satisfaction.”
If you approve of the tenant's contractor, require the tenant to give you a copy of the contract for your files. That way, if the contractor isn't performing the services the tenant has hired it to do and that's endangering the property, your manager will be able to inform the tenant that the services in the contract that you approved of aren't being provided, that it's causing a problem, and that it needs to quickly resolve the issue with the contractor. You may adapt this Model Lease Language for your snow removal clause:
Model Lease Language
Tenant and its customers shall have the non-exclusive right to use the parking lot adjacent to the building of which the Premises forms a part. Tenant recognizes that the parking area exists to provide customers quick and easy access to the Premises and all the other stores in the Center, thereby promoting the Center's business. Tenant at all times during the Lease Term and at Tenant's expense, shall maintain the adjoining sidewalks and curbs to the Premises in a clean order including [insert services, e.g., repairs, striping], and removal of snow and ice according to these terms and conditions: [insert terms and conditions of snow removal, e.g., areas from which snow and ice must be removed, minimum snow accumulation amount before removal, sanding/salting, and/or shoveling will begin, if the removal will begin automatically or only upon request from the owner/manager, times that the removal will be done, etc.]. Tenant shall provide its own snow removal contractor to be approved by Landlord to Landlord's sole satisfaction, and shall furnish Landlord with a copy of the signed contract.
Agree to Share Removal Costs, Responsibilities
Some owners want to clear their properties of snow and ice as quickly as possible and asking tenants to clear certain areas of the property—namely, the sidewalks or signage in front of their stores—expedites the process and reduces the cost for owners. If you negotiate to share snow removal responsibilities and costs with the tenant, consider using this Model Language:
Model Lease Language
At all times during the Lease Term and any Extended Term, Landlord shall maintain the Common Areas, adjoining sidewalks, and curbs to the Premises in a clean order including [insert services, e.g., repairs, striping], and removal of snow and ice according to these terms and conditions: [insert terms and conditions of snow removal, e.g., minimum snow accumulation amount before removal, etc.]. Tenant shall be responsible for maintaining, cleaning, and removing snow and ice from the sidewalk immediately outside of the storefront. Tenant may choose to provide its own snow removal contractor, to be approved by Landlord to Landlord's sole satisfaction.
The bottom line is that tenants typically want owners to be responsible for snow and ice removal, and owners want to maintain full control of who, when, and how that gets accomplished, emphasizes Fogel.
Insider Source
Kevin M. Fogel, MSRE: President, KMF Property Group, Inc., 49 Irma Dr., Oceanside, NY 11572; (516) 536-5881; kfogel@kmfpropertygroup.com
See also: "Require Certain Terms for All Snow Removal Contracts"
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