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.
A Georgia Gross Up Clause is a crucial provision that should be included in a Base Year Lease agreement. This clause ensures fairness in the allocation of operating expenses between the landlord and tenant by accounting for changes in occupancy levels throughout the lease term. By utilizing a Gross Up Clause, both parties can avoid potential disputes over operating expenses. There are two main types of Georgia Gross Up Clauses that can be used in a Base Year Lease: 1. Level Gross Up Clause: This type of Gross Up Clause is commonly used in leases where the tenant's occupancy level fluctuates during the lease term. It allows the landlord to "gross up" the operating expenses by calculating the anticipated expenses for a fully occupied premises, even if the actual occupancy level is less. This ensures that the tenant pays their fair share of operating expenses based on the assumption of full occupancy. 2. Controllable Expense Gross Up Clause: This type of Gross Up Clause focuses on controllable expenses such as utilities, maintenance, repairs, and management fees. It allows the landlord to adjust these expenses to reflect the operating costs that would be incurred if the property were fully occupied. By "grossing up" these controllable expenses, the tenant pays their proportionate share based on a fully occupied premises, regardless of the actual occupancy levels. In a Georgia Gross Up Clause, it is important to define the base year against which the operating expenses are measured. Typically, the base year is set as the first year of the lease term. This serves as the benchmark against which all subsequent years' expenses are compared and adjusted under the Gross Up Clause. Including a Georgia Gross Up Clause in a Base Year Lease ensures that the tenant's obligation to pay operating expenses is proportionate to their actual usage and in accordance with the property's full occupancy potential. This provision promotes transparency, fairness, and avoids potential conflicts between the landlord and tenant during the lease term.
