Maine Clause for Grossing Up the Tenant Proportionate Share

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Multi-State
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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.

The Maine Clause for Grossing Up the Tenant Proportionate Share is an important aspect of commercial leases. This clause is designed to ensure that tenants contribute their fair share towards the operating expenses of a building, even if the building is not fully occupied. In commercial leases, tenants are generally responsible for a portion of the operating expenses, commonly known as the Proportionate Share. This share is usually calculated based on the ratio of the tenant's leased area to the total leasable area of the building. However, if the building is not fully occupied, the Proportionate Share of the operating expenses may not accurately represent the tenant's fair contribution. To address this issue, the Maine Clause allows landlords to "gross up" the tenant's Proportionate Share by adjusting it to reflect a theoretical full occupancy level. This means that the tenant's share is recalculated as if the building were fully occupied, thereby ensuring that they contribute their fair share towards the operating expenses. There are different types of the Maine Clause for Grossing Up the Tenant Proportionate Share, which may vary depending on the specific lease agreement. Some common variations include: 1. Actual Gross-Up: Under this type, the tenant's Proportionate Share is adjusted based on the actual occupancy level of the building. If the occupancy is below 100%, the tenant's share is recalculated using the actual number of occupied areas, instead of assuming full occupancy. 2. Budgeted Gross-Up: In this case, the tenant's Proportionate Share is adjusted based on a predetermined occupancy level, typically set forth in the lease agreement. The tenant's share is "grossed up" as if the building were occupied at this predetermined level, regardless of the actual occupancy. 3. Scalable Gross-Up: This variation allows for a gradual adjustment of the tenant's Proportionate Share based on the level of occupancy. For example, if the building is 80% occupied, the tenant's share would be adjusted to reflect 80% of the Proportionate Share amount. 4. Per-Occupied-Square-Foot Gross-Up: Here, the tenant's Proportionate Share is adjusted based on the actual square footage occupied by the tenant, rather than the total leased area. This approach ensures that the tenant only pays for the area they are utilizing, even if the rest of the building is unoccupied. It's important for both landlords and tenants to understand the specific Maine Clause for Grossing Up the Tenant Proportionate Share outlined in their lease agreement. This clause helps maintain fairness in the allocation of operating expenses and ensures that both parties are aware of their financial responsibilities in relation to building occupancy.

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FAQ

Many commercial leases include provisions allowing landlords to ?gross-up? operating expenses. This means that if the building is not fully occupied, the landlord can bill the expenses to the tenants as if the building is fully occupied.

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%.

What Does Gross-Up Mean? Gross-up is additional money an employer pays an employee to offset any additional income taxes (Social Security, Medicare, etc.) an employee would owe the IRS when that employee receives a company-provided cash benefit, such as relocation expenses.

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.

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).

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.

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.

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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. In other words, the lease allocates a certain amount to each tenant based on that tenant's proportionate share of the area within the building. Many ...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 ... May 19, 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) ... Sep 26, 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 ... Complete, up-to-date sets of the Maine Revised Statutes Annotated are available in ... should include the proportionate share of the real estate held in common, ... Tax Expenses Tenant shall pay to Landlord Tenant's Share of all real property taxes applicable to the Project. Prior to delinquency, Tenant shall pay any and ... May 4, 2020 — Without a gross-up provision, each tenant would pay fees of $12,500 made up of $10,000 fixed and $2,500 variable based on their 5% share. In ... Aug 9, 2023 — In triple net office leases, tenants are required to reimburse landlords for a portion of the building's overall operating expenses. Discover how the Gross Up Provision in a commercial lease is designed to protect landlords and remain fair to tenants, how it's calculated, and more.

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Maine Clause for Grossing Up the Tenant Proportionate Share