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.
Description: The Illinois Gross up Clause is an important component that should be included in a Base Year Lease in the state of Illinois. This clause ensures that the landlord is compensated for any increase in operating expenses that may occur during the lease term. It aims to maintain a fair and equitable distribution of costs between the landlord and the tenant. The Gross up Clause in a Base Year Lease provides a mechanism to account for changes in operating expenses, such as property taxes, insurance, utilities, and maintenance costs. It establishes a base year against which any subsequent increases will be measured. Typically, the base year is the initial year of the lease term. There are different types of Illinois Gross up Clauses that can be used in a Base Year Lease, including: 1. Expense Stop Gross up Clause: This clause sets a maximum limit on the operating expenses that can be passed on to the tenant. Once the expenses exceed the specified limit, the landlord will absorb the additional costs. 2. Expense Reimbursement Gross up Clause: Under this clause, the tenant reimburses the landlord for a proportionate share of the actual increase in operating expenses. The reimbursement is calculated by comparing the current year's expenses to the base year's expenses. 3. Expense Index Gross up Clause: This clause uses an expense index to adjust the operating expenses. The expense index represents the average increase in costs across a specified market or industry. The tenant's proportionate share of the increase is calculated based on this index. The choice of the specific Illinois Gross up Clause that should be used in a Base Year Lease depends on various factors, such as the type of property, market conditions, and the negotiating power of the parties involved. It is advisable to consult with a real estate attorney or professional to determine the most suitable clause for a particular lease agreement. Including an Illinois Gross up Clause in a Base Year Lease helps protect both the landlord and the tenant by ensuring a fair allocation of operating expenses. It provides a level of predictability and transparency, allowing for better financial planning and budgeting.
