LocalCenters.com — The #1 Strip Mall Reference Site

HVACpicHVAC maintenance is nearly always addressed in strip mall leases, and in most cases it is the tenant’s responsibility. Over the years we’ve discovered that the great majority of tenants do not properly maintain their HVAC units. Following are some major changes we have recently made.


Globally, we have offered to take on the maintenance and charge back the costs as a CAM (Common Area Maintenance) item. In most cases we can do it for less than the tenant.

To start, we sent letters to all tenants, advising them of this change. We told them that we would be starting within 60 days, however if they could provide invoices of quarterly maintenance (our stipulated maintenance period in the lease) we would delete them from the service. We had exactly 7% of the tenants submit these invoices. As we suspected, they’re not maintaining their HVAC units.

We then bid the service scope to several HVAC contractors recommended by our  property management company. We specified quarterly filter changes and semi-annual inspections. Any repairs will be charged directly to the tenant.

There are two arguments to this policy. One, the obvious, is that if the HVAC unit needs repair or replacement then the tenant is obligated to do it. True. Now, get them to do it!  They are also obligated to pay contract rent, and like most strip mall owners we’ve had to reduce that since 2008 to keep them in place. With the strip mall owners taking on the maintenance and repair task, we will undoubtedly extend the life of the HVAC units and save money over time.

The second argument is that by taking on the maintenance we become responsible for repairs as it was our maintenance company servicing the units. That has been our concern for years, and why we have not opted in to this concept of owner directed maintenance. To ensure the survival of the maintenance responsibility of the tenant in the lease, we were very clear in our letter than their obligations or responsibilities would not change, only the maintenance company unless they could prove that they had been maintaining the HVAC units.

We are too early in the process to evaluate the results, however it’s difficult to argue that we as owners controlling the maintenance of a very expensive item is an improvement. How about you? What do you do for HVAC maintenance?


California created less than 1% of the new jobs created in Texas,  over the past two years. An unresponsive and punitive bureaucracy at both state and local levels in California, along with disturbing demographic and social trends, contribute to the growing exodus of businesses leaving California and the dwindling numbers of new start ups and relocations from other states.

During a recent guest appearance on a local Wall Street Journal Business Network radio station affiliate, host Mark Montgomery and I discuss the needed steps to help get California back in the game of business development.

Here are a few topics from our discussion:

*  California is becoming a brain drain. Only 56% of 2010 California college graduates have found work, and they are starting to move out of state en masse.

*  While Economic Development is 12.5% of the Texas annual budget, it doesn’t even warrant a line item in California’s budget.

*We examine three business surveys with several criteria for ranking state desirability for doing business. Texas ranks very high in all; California is often at the bottom. We look at why.

* Find out what well known company has scrapped all expansion plans in California, and received a personal phone call from Gov. Rick Perry, thanking them for doing business in his state (even if I did screw it up and said “California” instead of “Texas.” Apologies to the governor;-)

* What small business people can do in acts of self-defense against an unfriendly business climate

Listen to the podcast here


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