This office lease form is regarding the renewal or other extension of the lease as it relates to the "Base Year Taxes" and the "Base Year for Operating Expenses".
Kansas Option to Renew that Updates the Tenant Operating Expense and Tax Basis In Kansas, the Option to Renew is a commonly used provision in commercial leases that allows tenants the opportunity to extend their lease term for an additional period. This option, when exercised, enables the tenant to continue occupying the leased property under the same terms and conditions as the original lease agreement, with a few notable updates, including the adjustments to the Tenant Operating Expense and Tax Basis. The Tenant Operating Expense refers to the costs incurred by the landlord in operating and maintaining the leased property, such as utilities, maintenance, repairs, insurance, and property management fees. These expenses are typically passed down to the tenant according to a predetermined formula or as a proportionate share based on the tenant's leased square footage. However, when the Option to Renew is exercised, the tenant may negotiate a revised share of these expenses to reflect current market rates or changes in the tenant's space utilization. Similarly, the Tax Basis is a crucial consideration in commercial leases, as it determines the tenant's liability for property taxes. Generally, property taxes are allocated based on the assessed value of the leased property. However, during the lease renewal, the tenant may request an updated tax basis to reflect changes in property valuations or reassessments conducted by local tax authorities. This adjustment ensures that the tenant pays an equitable amount of property taxes during the extended lease term. While the basic concept of the Option to Renew that Updates the Tenant Operating Expense and Tax Basis remains consistent, there may be variations or specialized forms of this provision in Kansas: 1. Percentage-based Adjustment: This type of option stipulates that the tenant's operating expense and tax obligations will be adjusted based on a certain percentage increase or decrease from the previous lease term. 2. Negotiated Adjustment: Under this variant, the tenant and landlord enter into negotiations to determine the revised tenant operating expense and tax basis, taking into account specific market conditions and property assessments. 3. Step-up Adjustment: Here, the option includes predetermined gradual increases in the tenant's operating expense and tax obligations throughout the renewed lease term. These increases could be annual, biennial, or follow any other agreed-upon schedule. 4. Consumer Price Index (CPI) Adjustment: In some cases, the tenant's operating expense and tax basis may be linked to the CPI, a widely used economic indicator that measures inflation. This ensures that costs adjust to the overall changes in the economy. It's important for tenants to carefully review the details of the Option to Renew that Updates the Tenant Operating Expense and Tax Basis in their lease agreements and seek legal advice if necessary. Understanding the specific terms and variations of this provision can help tenants make informed decisions and avoid any unforeseen financial burdens during the extended lease term.
