This office lease form describes an operating cost escalations provision.In the event that the operating costs for any calendar year during the term of this lease shall be greater than the base operating costs, the tenant will pay to the landlord additional rent of an amount equal to such an increase.
The Indiana Operating Cost Escalations Provision is a legal measure that pertains to commercial real estate leasing in the state of Indiana. This provision is designed to address the issue of rising operating costs for landlords and impacts the tenant's responsibility to cover these expenses. Under this provision, landlords have the right to pass on some or all of the increased operating costs to their tenants. The operating costs primarily include expenses related to the maintenance, repair, and operation of the leased property, such as property taxes, insurance premiums, utilities, and common area maintenance fees. There are several types of Indiana Operating Cost Escalations Provisions that can be seen in commercial leases: 1. Gross Lease with Operating Expense Stop: In this type of lease, the tenant pays a fixed rent amount, and the landlord bears the initial burden of operating costs up to a certain predetermined amount (also known as "stop"). However, if the operating expenses exceed the stop amount, the tenant is responsible for covering the excess costs. 2. Triple Net Lease: With this type of lease, the tenant is responsible for paying the base rent as well as all operating expenses directly. These expenses typically include property taxes, insurance, utilities, and maintenance costs. The tenant may also be required to contribute to common area maintenance fees. 3. Expense Pass-through Clause: This provision enables the landlord to pass on the actual operating costs directly to the tenant. The landlord provides the tenant with an annual operating expense statement, detailing the costs incurred during the previous year. The tenant is then responsible for paying their share of these expenses based on their pro rata share of the total leasable area. It's important for both landlords and tenants to thoroughly review and understand the specific terms and conditions outlined in the Indiana Operating Cost Escalations Provision of their lease agreement. This provision plays a significant role in determining the financial obligations of both parties and ensuring transparency in the cost-sharing arrangements. Landlords can utilize the Indiana Operating Cost Escalations Provision to safeguard against the potential financial strain caused by fluctuating operating expenses. On the other hand, tenants must carefully analyze the expenses they may be liable for, as it directly impacts their overall occupancy costs.
