This office lease clause states the conditions under which the landlord can and can not furnish any particular item(s) of work or service which would constitute an expense to portions of the Building during the comparative year.
The Illinois Clause for Grossing Up the Tenant Proportionate Share is a crucial aspect of commercial real estate leases in the state. This clause governs the method of calculating and distributing expenses among tenants based on their proportionate share of the property. In Illinois, there are primarily two types of clauses for grossing up the tenant proportionate share: the Single Tax Method and the Expense Stop Method. The Single Tax Method is the more common approach. Under this clause, the landlord is responsible for paying all operating expenses related to the property and then "grosses up" the tenant's proportionate share. This means that the landlord estimates the expenses that would be incurred if the property were fully occupied and then charges the tenant accordingly. This method ensures that the tenant pays its fair share without being burdened by the vacancy-related costs that the landlord would bear in the case of empty spaces. On the other hand, the Expense Stop Method involves setting a certain predetermined expense cap, known as an "expense stop," that the tenant is responsible for. This clause establishes the maximum amount of expenses for which the tenant is liable, beyond which the landlord covers the rest. For example, if the expense stop is $10,000 and the actual costs come to $12,000, the tenant would only be responsible for the $2,000 difference. This method provides the tenant with more certainty regarding their expenses and protects them from unexpected increases in operating costs. Both methods have their advantages and drawbacks, and the choice often depends on the preferences and negotiating power of the parties involved. Landlords generally prefer the Single Tax Method as it allows them to recover all operating expenses from the tenants. On the other hand, tenants may find the Expense Stop Method more beneficial, as it limits their financial liability and offers predictability. Overall, the Illinois Clause for Grossing Up the Tenant Proportionate Share is a critical consideration in commercial leases. It ensures that tenants bear their fair share of operating expenses in proportion to their use and occupancy of the property, and it provides a framework for calculating and distributing these expenses accurately.
