This office lease clause states the conditions under which the landlord can and can not furnish any particular item(s) of work or service which would constitute an expense to portions of the Building during the comparative year.
Nebraska Clause for Grossing Up the Tenant Proportionate Share: The Nebraska Clause for Grossing Up the Tenant Proportionate Share is a critical provision in commercial real estate leases. It ensures that tenants pay their fair share of operating expenses for a property while accounting for changes in occupancy rates and expenses. This clause is designed to protect both landlords and tenants from unfair financial burdens. In a lease agreement, the Tenant Proportionate Share refers to the portion of a property's operating expenses allocated to each tenant based on their square footage or another predetermined formula. These expenses may include property management fees, utilities, insurance, maintenance costs, and property taxes. The Nebraska Clause for Grossing Up the Tenant Proportionate Share is essential because it accounts for fluctuations in occupancy rates during the calculation of a tenant's share. This is especially relevant in multi-tenant buildings where vacancies can occur, leading to a temporary reduction in the overall occupancy rate. Beneficially, the Nebraska Clause allows the landlord to "gross up" the tenant's proportionate share, meaning that the tenant pays an amount based on the property's total operating expenses rather than the actual expenses incurred due to a vacancy. This protects the landlord from potential financial losses caused by vacancies and ensures that tenants equally bear the property's expenses. Different types of Nebraska Clauses for Grossing Up the Tenant Proportionate Share may include: 1. Straight-line Gross Up: This type of gross up considers the average occupancy rate throughout the year when calculating the tenant's share of operating expenses. The expenses are divided equally among all tenants, regardless of fluctuations in occupancy. 2. Variable Gross Up: In this scenario, the tenant's share of operating expenses is adjusted based on the property's actual occupancy rate during a given period. If there are periods of high vacancy, the tenant's expenses will be reduced accordingly, while increases occur when the occupancy rate rises. 3. Expense Stop Gross Up: With an expense stop, the tenant is responsible for operating expenses up to a specified amount. Expenses exceeding the agreed cap are then grossed up among all tenants, ensuring fairness among parties. It is crucial for both landlords and tenants to thoroughly review and negotiate the Nebraska Clause for Grossing Up the Tenant Proportionate Share in a lease agreement to ensure transparency, fairness, and protection for all parties involved. By clearly defining the method and factors used in the calculation, potential financial disputes can be minimized, fostering a positive and mutually beneficial leasing relationship.
