This office lease form is a clause regarding all direct and indirect costs incurred by the landlord in the operation, maintenance, repair, overhaul, and any owner's overhead in connection with the project.
The Arizona Clause Defining Operating Expenses is a crucial component of commercial real estate leases. It outlines the specific expenses that tenants are responsible for paying in addition to their base rent. This clause is designed to clarify and allocate the costs associated with maintaining and operating the property between the landlord and the tenant. Key terms related to the Arizona Clause Defining Operating Expenses include: 1. Operating Expenses: Operating expenses encompass the ongoing costs involved in running a commercial property. This can include property taxes, insurance premiums, maintenance and repairs, utilities, janitorial services, landscaping, security, and management fees. 2. Common Area Maintenance (CAM) Expenses: Some leases may include a specific clause known as the CAM provision, which focuses on the costs related to maintaining the common areas of a commercial property. These areas typically include lobbies, hallways, elevators, parking lots, and other shared spaces. CAM expenses often involve cleaning, lighting, landscaping, snow removal, and general upkeep. 3. Pass-Through Expenses: Landlords may pass on certain operating expenses directly to tenants. These expenses can include property taxes, insurance premiums, and maintenance costs. The Arizona Clause Defining Operating Expenses should clearly stipulate which costs are to be passed through to each tenant and how they will be calculated. 4. Exclusions: The clause may also outline any exclusions or limitations on certain expenses. For example, it might specify that capital expenditures, such as major renovations or upgrades, are not considered operating expenses and should not be passed on to the tenant. 5. Calculation Methods: The Arizona Clause Defining Operating Expenses should detail the methodology for calculating and allocating expenses. This can include a base year approach, where tenants are responsible for any increase in expenses above a specified base year, or a proportional sharing approach, where tenants pay a percentage of the overall operating expenses based on their leased square footage. It is important to note that the specific terms and language used in the Arizona Clause Defining Operating Expenses may vary depending on the lease agreement and the landlord's preferences. Therefore, it is essential for both landlords and tenants to closely review and negotiate this clause to ensure a clear understanding of their respective responsibilities.
