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.
Maryland Gross up Clause in a Base Year Lease: The Maryland Gross up Clause is a provision that is commonly used in commercial real estate leases to allocate and adjust expenses related to common areas in a building or property. The purpose of this clause is to ensure fairness and suitability in the distribution of costs among tenants, especially in situations where the total expenses fluctuate from year to year. In a Base Year Lease, the Gross up Clause establishes a predetermined base period, typically the first year of the lease term, as the reference point for calculating and adjusting common area expenses. Common area expenses may include maintenance, repairs, utilities, insurance, taxes, and other costs associated with the operation and upkeep of shared spaces such as hallways, restrooms, lobbies, parking areas, and elevators. The Maryland Gross up Clause allows the landlord to "gross up" or adjust expenses based on a specified occupancy rate. This means that if the building is not fully occupied during the base period, the expenses will be calculated as if the building were at full occupancy. The purpose of this adjustment is to prevent the burden of unoccupied space from falling solely on the tenants that are occupying the property during the base year. There are different types of Maryland Gross up Clauses that may be used in a Base Year Lease, which include: 1. Full Gross up: In this type of clause, the landlord grosses up the expenses based on the total rentable square footage of the building, regardless of actual occupancy. This ensures that tenants are not unfairly burdened with higher expenses due to unoccupied areas. 2. Partial Gross up: This clause allows the landlord to gross up the expenses using a predetermined occupancy rate or percentage. For example, if the occupancy rate reaches 80%, the landlord may gross up the expenses accordingly. 3. No Gross up: In some cases, the lease may not include a gross up clause, meaning the expenses are calculated based on the actual occupancy rate during the base year. This option is less common as it can lead to inequitable distribution of expenses when there are fluctuations in occupancy rates. Landlords and tenants should carefully negotiate the terms of the Maryland Gross up Clause to determine the appropriate method of calculating and adjusting common area expenses, taking into consideration factors such as occupancy rates and the overall fairness of cost allocation. Seeking professional legal advice is recommended to ensure both parties' rights and obligations are clearly defined and agreed upon.
