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.
When it comes to leasing commercial properties in Idaho, landlords and tenants often include specific clauses in their lease agreements to outline who is responsible for covering certain expenses. One such crucial clause is the Idaho Gross Up Clause, which addresses the issue of operating expenses in relation to a base year lease. This clause ensures that the tenant's share of expenses remains fair throughout the lease term, even if the expenses increase. In a base year lease, the gross up clause is vital because it sets the base year as a benchmark for determining the tenant's share of operating expenses. Here's how it works: the landlord calculates the total operating expenses for a specific base year and then determines the tenant's portion based on a percentage or a specific formula agreed upon in the lease agreement. The gross up clause comes into play if the total operating expenses for subsequent years exceed the base year amount. There are different types of Idaho Gross Up Clauses that can be used in a base year lease. The most common ones are: 1. Percentage Gross Up Clause: This type of clause states that if the total operating expenses for a given year surpass the base year's amount, the tenant's share of expenses will be calculated based on a set percentage. For example, if the base year's expenses were $100,000 and the percentage gross up clause sets the tenant's share at 10%, any increase above $100,000 would be divided between the landlord and tenant accordingly. 2. Fixed Dollar Gross Up Clause: In this type of clause, a specific dollar amount is established as the base year's expenses. If the subsequent year's operating expenses exceed this fixed amount, the tenant's portion would be adjusted accordingly. For instance, if the base year expenses were set at $150,000 and the subsequent year's expenses were $175,000, the tenant would only be responsible for their share of the $25,000 difference. The Idaho Gross Up Clause offers protection to both landlords and tenants by ensuring that the tenant's expenses are capped even if operating costs rise. It ensures fairness and predictability while balancing the financial burdens between parties. While drafting a base year lease in Idaho, it is crucial to carefully consider the specific terms of the gross up clause. Both landlords and tenants should thoroughly review and negotiate the clause to determine the most suitable type and percentages. Seeking legal advice from a knowledgeable real estate attorney is beneficial to ensure compliance with Idaho leasing laws and regulations. In conclusion, the Idaho Gross Up Clause in a base year lease serves as a critical mechanism to address and allocate operating expenses fairly between landlords and tenants. The type of clause selected, whether it be a percentage gross up or fixed dollar gross up, should be carefully tailored to the unique circumstances of the lease agreement.
