Louisiana Clause for Grossing Up the Tenant Proportionate Share

State:
Multi-State
Control #:
US-OL709
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Description

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.

In the context of commercial leases in Louisiana, the Louisiana Clause for Grossing Up the Tenant Proportionate Share is a provision that relates to the calculation of a tenant's share of certain expenses in a multi-tenant property. This clause aims to allocate costs such as common area maintenance (CAM) expenses, property taxes, insurance premiums, and utility expenses among the various tenants in a fair and equitable manner. The basic principle behind the Louisiana Clause for Grossing Up the Tenant Proportionate Share is to ensure that each tenant's share of the expenses is proportionate to the leased square footage they occupy within the property. This eliminates any potential inequities that may arise due to variations in tenant occupancy or vacant spaces within the property. There are different types or variations of the Louisiana Clause for Grossing Up the Tenant Proportionate Share that landlords and tenants may encounter in commercial lease agreements. These include: 1. Fully Grossed-Up Basis: Under this type of clause, the landlord is responsible for covering all operating expenses associated with the property. The tenant's rent includes a fully grossed-up amount, meaning that it already accounts for their proportionate share of expenses. 2. CPI (Consumer Price Index) Adjustment: In some instances, the Louisiana Clause for Grossing Up the Tenant Proportionate Share may provide for adjustments to a tenant's share of expenses based on changes in the Consumer Price Index. This adjustment allows for keeping the proportionate share updated and reflective of the fluctuations in inflation. 3. Separate Overage Provision: This variation of the clause may specify that if the actual expenses incurred in a given year exceed the estimates provided by the landlord, the tenant will be responsible for paying their share of the excess amount. This provision ensures that the tenant does not inadvertently benefit from any underestimation of expenses. 4. Minimum Rent Threshold: Some leases include a minimum rent threshold in regard to operating expenses. If the actual expenses do not reach or exceed this threshold, the tenant is not obligated to pay their proportionate share of the expenses. This protects tenants from disproportionately high expenses for minor maintenance or repair work. Overall, the Louisiana Clause for Grossing Up the Tenant Proportionate Share is a crucial component of commercial lease agreements in Louisiana as it establishes a fair mechanism for allocating expenses among tenants. The specific type of clause used will depend on the negotiating dynamics and preferences of the parties involved in the lease agreement.

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FAQ

Gross-ups are also practical for tenants. A prime example is a lease with a base year or expense stop. If a tenant negotiates a base year, then, in most cases, the tenant will pay its share each year of the operating expenses which exceed the base year's expenses.

Many commercial leases, especially office leases, include a provision that allows landlords to ?gross up? operating expenses. That is, if the building is not fully occupied, the landlord is empowered to gross up or overstate the expenses as if the building is fully occupied (or nearly full).

Also known as tenant's pro rata share. The portion of a building occupied by the tenant expressed as a percentage. When a tenant is responsible for paying its proportionate share of the landlord's costs for the building, such as operating expenses and real estate taxes, the tenant pays this amount over a base year.

Correctly drafted, a gross up provision relates only to Operating Expenses that ?vary with occupancy??so called ?variable? expenses. Variable expenses are those expenses that will go up or down depending on the number of tenants in the Building, such as utilities, trash removal, management fees and janitorial services.

It is a contract between a landlord and tenant, wherein the lessee, in exchange for the exclusive use of a piece of property, agrees to pay the lessor a fixed sum of money for a certain period of time that encompasses rent and all costs associated with ownership, such as taxes, insurance, and utilities.

Grossing Up is a process for calculating a tenant's share of a building's variable operating expenses, where the expenses are increased for expense recovery purposes, or Grossed Up, to what they would be if the building's occupancy remained at a specific level, typically 95%- 100%.

So, what is a gross-up provision? Simply stated, the concept of ?gross up provision? stipulates that if a building has significant vacancy, the landlord can estimate what the variable operating expense would have been had the building been fully occupied, and charge the tenants their pro-rata share of that cost.

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If the operating expenses were not “grossed up,” each tenant would have to pay its proportionate share of the $100,000 operating expenses, or $10,000 for each ... How to fill out Clause For Grossing Up The Tenant Proportionate Share? When it comes to drafting a legal document, it's better to leave it to the professionals.If the building becomes fully occupied in a later year, the tenant's proportionate share will be calculated using the increase in operating expenses which ... 19 May 2022 — If the building has five different tenants, each occupying one floor, each tenant's proportionate share would be 10% (1/10 of the total building) ... 26 Sept 2019 — The tenants have agreed to pay their proportionate share of the CAM expenses, and the lease should reflect just that—in our simple example ... The Landlord shall furnish to the Tenant an estimate of the Proportionate Share of Taxes payable by the Tenant during the period so determined by the Landlord. Adhere to this simple guideline redact Clause for Grossing Up the Tenant Proportionate Share in PDF format online free of charge: ... Complete this form in 5 ... 9 Aug 2023 — Without Gross-Up Provision: Each tenant would pay its pro-rata share of the total operating expenses, which is $10,000 ($7,500 for fixed ... 4 May 2020 — Gross-up provisions are common to multi-tenant property types, where tenants are responsible for some share of operating costs. What is a Gross- ... In Gross v. Williams, 99-C-1865 (La. App. 4 Cir. 1999), the appellate court reduced a subsidized tenant's appeal bond to monthly payment of her share of the ...

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Louisiana Clause for Grossing Up the Tenant Proportionate Share