What is TMI in a Commercial Lease?

If you’re new to commercial leasing, you’re probably quite amazed by the highly technical, meticulous nature of the contract. Leases for these spaces are very different from residential agreements, especially since landlords may require you to pay an amount in addition to your actual rent.

This payment often covers taxes, maintenance, and insurance (TMI). When you find out that you’re obligated to pay, it could have a significant effect on whether the space is affordable. A Florida contract attorney can explain the details, but it’s helpful to review some answers to frequently asked questions about TMI in a commercial lease.

What’s included in TMI? 

In most cases, the bulk of your TMI will go toward your landlord’s property taxes and some insurance costs. Beyond these amounts, you might think of TMI as including many of the same maintenance costs that you’d pay as a homeowner in an HOA. Examples include:

  • Landscaping, waste removal, and cleaning of common areas;
  • Paying for building management costs;
  • Administrative fees; and,
  • Ongoing repairs and maintenance for the roof, HVAC, plumbing, and related costs.

“The division of maintenance obligations is one of the most significant items requiring negotiation and attention to specifics.”

BrewerLong Attorney Ashley V. Brewer

In addition, Florida imposes sales tax on leases of commercial property, so some of these amounts are also built-in to TMI.

Why is TMI separate from the base rent? 

It’s a common practice for landlords to present their monthly rent in terms of a price per square foot, so tenants like you can compare different spaces. Companies separate out TMI in leases because the tenants are the actually using the property and taking advantage of the features that additional rent supports financially – usually in the form of more customer traffic due to the enhanced appearance of the space.

How does the landlord calculate TMI? 

Usually, your landlord will add up the total costs for annual taxes, insurance, and maintenance, and then divide it by the total square feet of the building. From there, the company multiplies the per square price by the number of square feet in your individual space. The total is the amount of TMI that you’ll be responsible for paying, though the formula may vary depending on your circumstances.

Does TMI fluctuate over time? 

Because property taxes make up a good proportion of the total TMI amount, you can expect your additional rent payments to increase or decrease. As key systems age, including the roof, HVAC, and plumbing, the costs may also fluctuate.

Can I negotiate TMI? 

It can be challenging for a prospective tenant to negotiate changes to TMI. Landlords know that their tenants talk, and they don’t want to create conflict by offering one business a lower TMI as compared to others. 

Discuss Commercial Leases with an Orlando, FL Contract Lawyer

If you have additional questions about TMI in a commercial lease, please contact BrewerLong. Our team advises business owners through Central Florida, including Orlando, Sanford, and Winter Park. We can schedule a free consultation to provide more information on commercial leasing issues.

Author Photo

Ashley Brewer

Ashley helps business owners and executives protect their businesses and intellectual property. Her goal is to minimize risks as businesses grow. Ashley regularly advises business leaders about owner agreements, intellectual property (protection, management, and capitalization), regulatory compliance, real estate, and commercial contracts. Ashley enjoys helping new and growing businesses with careful planning and problem prevention.

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