A holdback right lets you escrow disputed CAM charges instead of paying first and suing later, but fewer than an estimated 20% of leases include one.
A holdback right allows the tenant to withhold a portion of rent or CAM payments when the landlord is in default or has failed to deliver required documentation (such as the annual reconciliation statement). The withheld amount is typically held in escrow until the dispute is resolved. This provides tenants with financial leverage without creating a default under the lease.
Without a holdback right, tenants must continue paying full charges even when the landlord is clearly in the wrong, and then try to recover overpayments later through negotiation or litigation. A holdback right reverses this dynamic by allowing tenants to retain disputed funds until the issue is resolved, creating real incentive for landlords to respond to disputes promptly.
“If Tenant disputes any amount shown on the annual reconciliation statement, Tenant shall pay the undisputed portion when due and may withhold the disputed amount pending resolution of the dispute. Tenant shall provide Landlord with written notice specifying the disputed items and the basis for the dispute within thirty (30) days of the payment due date. The disputed amount shall be deposited in an interest-bearing escrow account. Within sixty (60) days of resolution, the prevailing party shall receive the escrowed funds plus accrued interest.”
This is illustrative language only. Your actual lease language controls your rights.
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< 20%
Fewer than an estimated 20% of standard-form commercial leases include a structured holdback right for tenants [industry estimate]
Source: Commercial Lease Negotiation Analysis (2024)
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Go to lextract.ioThis page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.
