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 Kentucky Clause for Grossing Up the Tenant Proportionate Share is an essential provision in commercial real estate leases that ensures fair distribution of expenses among multiple tenants within a property. This clause is particularly relevant when it comes to covering operating expenses such as common area maintenance fees, property taxes, utilities, and insurance costs. The purpose of the Kentucky Clause for Grossing Up the Tenant Proportionate Share is to provide a method to calculate and adjust the tenant's share of expenses based on the percentage of the total rentable square footage they occupy in relation to the entire property. It prevents any one tenant from shouldering an unfair burden of operating costs, especially in situations where there are vacant or occupied but unused spaces within the property. The leased property's grossed up tenant proportionate share refers to the hypothetical percentage share that each tenant would pay if the property were fully occupied. It allows share calculations to be based on the total potential rentable square footage rather than the actual occupied square footage. This approach ensures that each tenant properly contributes to the operating expenses as if the property were fully leased. There are different types of Kentucky Clauses for Grossing Up the Tenant Proportionate Share that can be included in a commercial lease agreement. These include: 1. Full Gross-Up: With this type of clause, the tenant pays the proportionate share of the operating expenses based on their leased square footage, as if all space within the property were occupied. This ensures that tenants are accountable for their share regardless of vacancy levels. 2. Partial Gross-Up: This type of clause allows the landlord to gross up the tenant's proportionate share up to a certain percentage. For example, the clause may state that the tenant's proportionate share will be grossed up to 90% of the total potential rentable square footage. This allows for some flexibility and reduces the tenant's share calculation to a more reasonable figure. 3. No Gross-Up: In rare cases, leases may omit the gross up provision altogether. In such instances, the tenant's proportionate share is calculated based solely on their occupied square footage, without considering any vacancy or potential unoccupied space within the property. This approach can potentially result in an inequitable allocation of expenses, as a tenant with significant unoccupied space may pay less than their fair share. The inclusion of a Kentucky Clause for Grossing Up the Tenant Proportionate Share in a commercial lease agreement is vital for setting fair and equitable distribution of operating expenses. It ensures transparency and prevents any undue burden or unfair advantage for any one tenant within the property.
