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.
The Tennessee Gross-Up Clause in an Expense Stop Stipulated Base or Office Net Lease is an important provision that addresses the allocation of operating expenses between the landlord and tenant. This clause is particularly relevant in commercial real estate transactions in Tennessee and aims to ensure fairness and transparency in cost-sharing. In basic terms, a gross-up clause enables the landlord to increase the tenant's proportionate share of operating expenses in certain situations. This ensures that the landlord receives a net amount equal to the stated expense stop, even if some expenses are tax-deductible for the landlord. There are several types of Tennessee Gross-Up Clauses that may be used in an Expense Stop Stipulated Base or Office Net Lease, including: 1. Basic Gross-Up Clause: This type of clause enables the landlord to increase the tenant's expense stop or share of operating expenses to account for any tax benefits the landlord may receive due to deductible expenses. The clause specifies the method for calculating the grossed-up amount, usually based on the applicable tax rates or formulas. 2. Operating Expense Gross-Up Clause: This clause allows the landlord to gross-up the tenant's share of operating expenses, such as maintenance, insurance, utilities, and property taxes. It ensures that the tenant's payment covers the actual expenses incurred by the landlord, considering any tax deductions. 3. Tax Expense Gross-Up Clause: This type of gross-up clause focuses specifically on tax-related expenses, such as property taxes. It ensures that the tenant's share of tax expenses is adjusted, taking into account any tax benefits the landlord may receive due to deductions or exemptions. 4. CPI (Consumer Price Index) Gross-Up Clause: This clause utilizes the consumer price index to adjust the tenant's expense stop annually. It considers inflation or deflation rates to ensure that the expense stop keeps up with changing market conditions. The specific language and provisions of a Tennessee Gross-Up Clause may vary depending on the lease agreement and negotiations between the landlord and tenant. It is important for both parties to carefully review and understand the terms and implications of this clause to ensure a fair allocation of expenses in line with Tennessee laws and regulations. Overall, the Tennessee Gross-Up Clause serves as a mechanism to equitably distribute operating expenses between landlords and tenants, accounting for potential tax benefits and ensuring transparency in cost-sharing arrangements.The Tennessee Gross-Up Clause in an Expense Stop Stipulated Base or Office Net Lease is an important provision that addresses the allocation of operating expenses between the landlord and tenant. This clause is particularly relevant in commercial real estate transactions in Tennessee and aims to ensure fairness and transparency in cost-sharing. In basic terms, a gross-up clause enables the landlord to increase the tenant's proportionate share of operating expenses in certain situations. This ensures that the landlord receives a net amount equal to the stated expense stop, even if some expenses are tax-deductible for the landlord. There are several types of Tennessee Gross-Up Clauses that may be used in an Expense Stop Stipulated Base or Office Net Lease, including: 1. Basic Gross-Up Clause: This type of clause enables the landlord to increase the tenant's expense stop or share of operating expenses to account for any tax benefits the landlord may receive due to deductible expenses. The clause specifies the method for calculating the grossed-up amount, usually based on the applicable tax rates or formulas. 2. Operating Expense Gross-Up Clause: This clause allows the landlord to gross-up the tenant's share of operating expenses, such as maintenance, insurance, utilities, and property taxes. It ensures that the tenant's payment covers the actual expenses incurred by the landlord, considering any tax deductions. 3. Tax Expense Gross-Up Clause: This type of gross-up clause focuses specifically on tax-related expenses, such as property taxes. It ensures that the tenant's share of tax expenses is adjusted, taking into account any tax benefits the landlord may receive due to deductions or exemptions. 4. CPI (Consumer Price Index) Gross-Up Clause: This clause utilizes the consumer price index to adjust the tenant's expense stop annually. It considers inflation or deflation rates to ensure that the expense stop keeps up with changing market conditions. The specific language and provisions of a Tennessee Gross-Up Clause may vary depending on the lease agreement and negotiations between the landlord and tenant. It is important for both parties to carefully review and understand the terms and implications of this clause to ensure a fair allocation of expenses in line with Tennessee laws and regulations. Overall, the Tennessee Gross-Up Clause serves as a mechanism to equitably distribute operating expenses between landlords and tenants, accounting for potential tax benefits and ensuring transparency in cost-sharing arrangements.
