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 Puerto Rico Gross up Clause, also known as the Puerto Rico Gross Up Provision, is an important aspect of a Base Year Lease agreement. This clause ensures that tenants are fairly responsible for their portion of operating expenses, particularly in situations where the actual expenses exceed the base year expenses. Under a Base Year Lease, tenants are usually responsible for paying a portion of the building's operating expenses, such as property taxes, insurance, maintenance, and utilities. The base year, typically the lease commencement year, serves as a benchmark for calculating the tenant's share of expenses. However, as costs fluctuate over time, the Puerto Rico Gross up Clause becomes crucial to maintain fairness and balance in the lease agreement. There are different types of Puerto Rico Gross up Clauses that can be used in a Base Year Lease, depending on the specific terms agreed upon between the landlord and tenant. These include: 1. Direct Expense Gross up: This type of clause allows for the upward adjustment of the tenant's expense contribution beyond the base year when there is an increase in the building's operating expenses. It ensures that the tenant proportionately shares the burden of such increases. 2. Proportional Percent Increase Gross up: With this clause, the tenant's expense contribution is adjusted based on the percentage increase in operating expenses in relation to the base year. It ensures that the tenant's share remains proportionate to the overall expenses. 3. Expense Stop Gross up: Under this clause, the tenant's expense contribution is adjusted if the total operating expenses exceed a predefined threshold known as the "expense stop." Once the expense stop is reached, the tenant may be responsible for a higher percentage of expenses than outlined in the base year. 4. Absolute Dollar Gross up: In this type of clause, the tenant's expense contribution is directly adjusted by a specific dollar amount. The adjustment is made only if the actual operating expenses surpass the base year's figures. The choice of Puerto Rico Gross up Clause in a Base Year Lease depends on the negotiations between the landlord and tenant, their respective priorities, and market practices. It is crucial that both parties thoroughly understand the chosen clause and its potential impact to ensure fairness and transparency in the lease agreement.
The Puerto Rico Gross up Clause, also known as the Puerto Rico Gross Up Provision, is an important aspect of a Base Year Lease agreement. This clause ensures that tenants are fairly responsible for their portion of operating expenses, particularly in situations where the actual expenses exceed the base year expenses. Under a Base Year Lease, tenants are usually responsible for paying a portion of the building's operating expenses, such as property taxes, insurance, maintenance, and utilities. The base year, typically the lease commencement year, serves as a benchmark for calculating the tenant's share of expenses. However, as costs fluctuate over time, the Puerto Rico Gross up Clause becomes crucial to maintain fairness and balance in the lease agreement. There are different types of Puerto Rico Gross up Clauses that can be used in a Base Year Lease, depending on the specific terms agreed upon between the landlord and tenant. These include: 1. Direct Expense Gross up: This type of clause allows for the upward adjustment of the tenant's expense contribution beyond the base year when there is an increase in the building's operating expenses. It ensures that the tenant proportionately shares the burden of such increases. 2. Proportional Percent Increase Gross up: With this clause, the tenant's expense contribution is adjusted based on the percentage increase in operating expenses in relation to the base year. It ensures that the tenant's share remains proportionate to the overall expenses. 3. Expense Stop Gross up: Under this clause, the tenant's expense contribution is adjusted if the total operating expenses exceed a predefined threshold known as the "expense stop." Once the expense stop is reached, the tenant may be responsible for a higher percentage of expenses than outlined in the base year. 4. Absolute Dollar Gross up: In this type of clause, the tenant's expense contribution is directly adjusted by a specific dollar amount. The adjustment is made only if the actual operating expenses surpass the base year's figures. The choice of Puerto Rico Gross up Clause in a Base Year Lease depends on the negotiations between the landlord and tenant, their respective priorities, and market practices. It is crucial that both parties thoroughly understand the chosen clause and its potential impact to ensure fairness and transparency in the lease agreement.
