PUERTO RICO Law and Practice Contributed by: Antonio Santos, Donald Hull and Paola Canino, Pietrantoni Mendez & Alvarez LLC
Rent payments under commercial leases are generally payable on a monthly basis. 6.5 Rent Variation The amount of rent payable under a lease of commercial property in Puerto Rico is usually increased over the term of the lease, particularly in the case of leases covering a term of more than two to three years. 6.6 Determination of New Rent Rental increases can be negotiated as pre- determined fixed amounts or calculated, at the time of the increase, on the basis of an estab - lished index (such as an inflation or consumer price index). 6.7 Payment of VAT VAT is not payable on rents in Puerto Rico. 6.8 Costs Payable by a Tenant at the Start of a Lease In some cases, landlords of commercial property in Puerto Rico will require the tenant to pay one or two months’ rent in advance and/or a security deposit, typically equivalent to one month’s rent. 6.9 Payment of Maintenance and Repair In multi-tenant properties such as shopping cen - tres and office buildings in Puerto Rico, the cost of the maintenance and repair of common areas is commonly shared by all of the tenants propor - tionately (usually calculated on the basis of the proportion that the area leased by each tenant bears to the total leasable area of the property). 6.10 Payment of Utilities and Telecommunications Utility and telecommunications expenses that relate solely to the leased premises are typically paid by the tenant. Those expenses, as they relate to the common areas of a multi-tenant
property, are allocated among all of the tenants on a proportionate basis. 6.11 Payment of Property Taxes Tenants are typically required to reimburse the landlord for a pro rata share of real estate taxes on a pass-through basis in multi-tenant com - mercial properties. Since failure to pay real estate taxes will result in the imposition of a stat - utory lien on the leased property, in single-tenant properties the landlord will customarily pay the real estate taxes but include that cost in the rent to be paid by the tenant (with escalations in the rental rate if the tax assessment increases over the lease term). 6.12 Insurance Issues As is the case with real estate taxes, the cost of insurance under a lease of commercial property in Puerto Rico is most often assumed by the tenant. However, in the case of single-tenant properties, the landlord may opt to obtain and pay for insurance directly but include the cost in the rent to be paid by the tenant. 6.13 Restrictions on the Use of Real Estate It is typical in Puerto Rico for the landlord to impose restrictions in the lease agreement as to the uses that can be given to leased property by its tenant. Zoning and land use regulations, as well as unlawful noxious uses, can also serve as limitations. 6.14 Tenant’s Ability to Alter and Improve Real Estate Landlord and tenant are free to stipulate in the lease agreement the applicable conditions that will apply to alterations that the tenant is permit - ted to undertake in the leased premises. It is most common for a tenant to be permitted to make non-structural improvements to the property but
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