This office lease clause should be used in a base year lease. This form states that when the building is not at least 95% occupied during all or a portion of any lease year the landlord shall make an appropriate adjustment in accordance with industry standards of the building operating costs. This amount shall be deemed to be the amount of building operating costs for the year.
The Guam Gross Up Clause is a critical provision that should be incorporated into a Base Year Lease agreement. It ensures fair distribution of expenses related to tenant occupancy by adjusting the tenant's payment obligations based on changes in the building's operating expenses throughout the lease term. The Gross Up Clause safeguards both the landlord and the tenant from unexpected fluctuations in the property's operating costs. Under this clause, the landlord agrees to "gross up" the tenant's share of operating expenses, such as property taxes, insurance premiums, maintenance costs, and utilities, to a predetermined base year level. Essentially, the tenant only pays a proportionate share of expenses as if the property were fully occupied. There are several types of Guam Gross Up Clauses that can be utilized in a Base Year Lease, depending on the specific arrangement between the landlord and tenant. These can include: 1. Simple Gross Up: This type of clause involves adjusting the tenant's expenses by multiplying the actual expenses by the ratio of the building's current occupancy to the full occupancy. 2. Direct Expense Gross Up: Here, the gross up calculation considers only direct expenses, such as property taxes and insurance premiums. These expenses are adjusted based on the ratio of the building's current occupancy to the base value. 3. Direct and Indirect Expense Gross Up: With this type of clause, both direct and indirect expenses, such as maintenance costs and utilities, are considered. The expenses are adjusted using the same methodology mentioned above. 4. Partial Gross Up: In some cases, a partial gross up provision may be preferred by the parties involved. This allows for adjustments in specific expenses, while others may remain constant throughout the lease term. The choice of the Guam Gross Up Clause depends on the specific property and lease agreement being negotiated. It is crucial for both landlords and tenants to carefully review the terms and negotiate a fair and reasonable Gross Up Clause to ensure transparency and prevent any surprises related to operating expenses during the lease term.
The Guam Gross Up Clause is a critical provision that should be incorporated into a Base Year Lease agreement. It ensures fair distribution of expenses related to tenant occupancy by adjusting the tenant's payment obligations based on changes in the building's operating expenses throughout the lease term. The Gross Up Clause safeguards both the landlord and the tenant from unexpected fluctuations in the property's operating costs. Under this clause, the landlord agrees to "gross up" the tenant's share of operating expenses, such as property taxes, insurance premiums, maintenance costs, and utilities, to a predetermined base year level. Essentially, the tenant only pays a proportionate share of expenses as if the property were fully occupied. There are several types of Guam Gross Up Clauses that can be utilized in a Base Year Lease, depending on the specific arrangement between the landlord and tenant. These can include: 1. Simple Gross Up: This type of clause involves adjusting the tenant's expenses by multiplying the actual expenses by the ratio of the building's current occupancy to the full occupancy. 2. Direct Expense Gross Up: Here, the gross up calculation considers only direct expenses, such as property taxes and insurance premiums. These expenses are adjusted based on the ratio of the building's current occupancy to the base value. 3. Direct and Indirect Expense Gross Up: With this type of clause, both direct and indirect expenses, such as maintenance costs and utilities, are considered. The expenses are adjusted using the same methodology mentioned above. 4. Partial Gross Up: In some cases, a partial gross up provision may be preferred by the parties involved. This allows for adjustments in specific expenses, while others may remain constant throughout the lease term. The choice of the Guam Gross Up Clause depends on the specific property and lease agreement being negotiated. It is crucial for both landlords and tenants to carefully review the terms and negotiate a fair and reasonable Gross Up Clause to ensure transparency and prevent any surprises related to operating expenses during the lease term.
