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.
Title: Understanding Utah Gross-Up Clause for Expense Stop Stipulated Base or Office Net Lease Introduction: In a Utah gross-up clause, the landlord agrees to cover certain expenses related to the operation and maintenance of a commercial property, ensuring that the tenant is not burdened with excessive costs. This detailed description will provide insights into Utah's gross-up clause and its applicability in an expense stop stipulated base or office net lease. Key Terms: 1. Utah Gross-Up Clause: Refers to the contractual agreement between a landlord and a tenant that outlines the landlord's responsibility to absorb or "gross-up" certain expenses associated with the property's operation and maintenance. 2. Expense Stop: A predetermined amount specified by the landlord in the lease agreement, indicating the maximum level of operating expenses that the tenant is obligated to pay. 3. Stipulated Base or Office Net Lease: A lease agreement where the tenant is responsible for paying a specified amount of operating expenses, typically based on a predetermined amount or percentage. Types of Utah Gross-Up Clauses: 1. Full Gross-Up: Under this type of Utah gross-up clause, the landlord assumes responsibility for all operating expenses, including taxes, insurance, utilities, repairs, and maintenance costs. The tenant is relieved of any financial obligations beyond the agreed-upon rent payment. 2. Partial Gross-Up: In this scenario, the landlord covers specific operating expenses up to a certain percentage or predetermined amount. Expenses beyond this limit are prorated and passed on to the tenant. This option strikes a balance, offering some relief while maintaining shared responsibility. Benefits of a Utah Gross-Up Clause: 1. Cost Stabilization: By invoking a gross-up clause, the tenant's expenses remain predictable and stable. The clause protects the tenant from unexpected or unusually high costs, reducing financial uncertainty. 2. Competitive Advantage: A gross-up clause can make a lease more attractive to potential tenants. The assurance of controlled expenses makes the property more appealing, positioning it favorably against similar properties in the market. 3. Shared Responsibility: The gross-up clause facilitates a fair distribution of expenses between the landlord and tenant. It ensures that each party bears their share based on the allocated responsibilities determined in the lease agreement. Conclusion: Understanding the Utah gross-up clause and its applicability in an expense stop stipulated base or office net lease is crucial for both landlords and tenants. By implementing a carefully crafted gross-up clause, both parties can achieve cost stability, competitive advantages, and a fair sharing of responsibilities.
