This office lease clause should be used in an expense stop, stipulated base or office net lease. 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 for each lease year to determine what the building operating costs. Such an adjustment shall be made by the landlord increasing the variable components of such variable costs included in the building operating costs which vary based on the level of occupancy of the building.
Maine Gross Up Clause for Expense Stops in Stipulated Base or Office Net Leases A Maine Gross Up Clause is a crucial provision that should be included in an Expense Stop Stipulated Base or Office Net Lease to ensure fairness between landlords and tenants. This clause addresses the issue of operating expenses and defines how these expenses should be treated when the tenant's share of costs exceeds a certain predetermined amount, known as the Expense Stop. In an Expense Stop Stipulated Base or Office Net Lease, tenants are typically responsible for paying a proportionate share of the operating expenses associated with the property they occupy. However, to avoid excessive burdens on tenants, an Expense Stop is established. This Expense Stop sets a threshold beyond which the tenant will not be responsible for covering any additional expenses. The purpose of a Gross Up Clause is to establish guidelines for calculating the tenant's share of operating expenses when the Expense Stop is reached. These clauses vary depending on the lease agreement, but some common types include: 1. Prorate Gross Up Clause: This type of clause allows the landlord to allocate the expenses incurred beyond the Expense Stop to the tenant on a pro rata basis. The amount charged to the tenant will be based on their proportionate share of the total square footage leased within the property. This method ensures that each tenant pays their fair share in relation to their usage of the space. 2. Equal Gross Up Clause: On the other hand, an Equal Gross Up Clause treats all tenants equally, regardless of their leased square footage. If the Expense Stop is surpassed, the total amount of additional expenses is divided equally among all tenants. This approach is often employed in situations where tenants have similar lease terms or their spaces are indistinguishable in terms of size or amenities. 3. Cap Gross Up Clause: This type of clause places a cap on the tenant's gross up responsibility, limiting the maximum portion of expenses they can be charged for. If the expenses exceed the cap, the excess amount will be absorbed by the landlord. The cap ensures that tenants are not burdened with disproportionately high expenses. Including a Maine Gross Up Clause in an Expense Stop Stipulated Base or Office Net Lease is critical for both landlords and tenants. It promotes fairness in sharing operating expenses and avoids unexpected financial burdens on tenants. Landlords benefit by maintaining a consistent revenue stream, while tenants can accurately estimate their long-term financial obligations associated with operating expenses. In conclusion, the Maine Gross Up Clause is a fundamental component of an Expense Stop provision in a Stipulated Base or Office Net Lease. By understanding the different types of gross up clauses available, landlords and tenants can negotiate lease terms that align with their respective goals and provide clarity on their obligations for operating expenses beyond the Expense Stop.Maine Gross Up Clause for Expense Stops in Stipulated Base or Office Net Leases A Maine Gross Up Clause is a crucial provision that should be included in an Expense Stop Stipulated Base or Office Net Lease to ensure fairness between landlords and tenants. This clause addresses the issue of operating expenses and defines how these expenses should be treated when the tenant's share of costs exceeds a certain predetermined amount, known as the Expense Stop. In an Expense Stop Stipulated Base or Office Net Lease, tenants are typically responsible for paying a proportionate share of the operating expenses associated with the property they occupy. However, to avoid excessive burdens on tenants, an Expense Stop is established. This Expense Stop sets a threshold beyond which the tenant will not be responsible for covering any additional expenses. The purpose of a Gross Up Clause is to establish guidelines for calculating the tenant's share of operating expenses when the Expense Stop is reached. These clauses vary depending on the lease agreement, but some common types include: 1. Prorate Gross Up Clause: This type of clause allows the landlord to allocate the expenses incurred beyond the Expense Stop to the tenant on a pro rata basis. The amount charged to the tenant will be based on their proportionate share of the total square footage leased within the property. This method ensures that each tenant pays their fair share in relation to their usage of the space. 2. Equal Gross Up Clause: On the other hand, an Equal Gross Up Clause treats all tenants equally, regardless of their leased square footage. If the Expense Stop is surpassed, the total amount of additional expenses is divided equally among all tenants. This approach is often employed in situations where tenants have similar lease terms or their spaces are indistinguishable in terms of size or amenities. 3. Cap Gross Up Clause: This type of clause places a cap on the tenant's gross up responsibility, limiting the maximum portion of expenses they can be charged for. If the expenses exceed the cap, the excess amount will be absorbed by the landlord. The cap ensures that tenants are not burdened with disproportionately high expenses. Including a Maine Gross Up Clause in an Expense Stop Stipulated Base or Office Net Lease is critical for both landlords and tenants. It promotes fairness in sharing operating expenses and avoids unexpected financial burdens on tenants. Landlords benefit by maintaining a consistent revenue stream, while tenants can accurately estimate their long-term financial obligations associated with operating expenses. In conclusion, the Maine Gross Up Clause is a fundamental component of an Expense Stop provision in a Stipulated Base or Office Net Lease. By understanding the different types of gross up clauses available, landlords and tenants can negotiate lease terms that align with their respective goals and provide clarity on their obligations for operating expenses beyond the Expense Stop.
