This office lease clause should be used in an expense stop, stipulated base or office net lease. When the building is not at least 95% occupied during all or a portion of any lease year, the landlord shall make an appropriate adjustment for each lease year to determine what the building operating costs. Such an adjustment shall be made by the landlord increasing the variable components of such variable costs included in the building operating costs which vary based on the level of occupancy of the building.
A Michigan Gross Up Clause refers to a provision in a lease agreement, specifically in an Expense Stop Stipulated Base or Office Net Lease, that allows the landlord to adjust the tenant's share of operating expenses or property taxes to account for vacancies or decreases in occupancy within a building or property. This clause is designed to ensure that the landlord receives a sufficient amount of revenue to cover these expenses, even if some portions of the property are unoccupied. In essence, the Michigan Gross Up Clause serves as a safeguard for landlords, preventing potential losses incurred due to tenant turnover or vacant areas. By utilizing this clause, the landlord is able to distribute the additional expenses caused by these vacant spaces among the remaining tenants, ensuring a fair and equitable contribution towards the overall operating costs of the property. There are different types of Michigan Gross Up Clauses that can be incorporated into Expense Stop Stipulated Base or Office Net Leases. These variations typically depend on the specific terms and conditions negotiated between the landlord and tenant. Some common types include: 1. Full Gross Up Clause: In this type, the landlord is allowed to distribute the entire additional expenses resulting from vacancies evenly across all tenants, regardless of the extent of their occupancy. 2. Partial Gross Up Clause: Here, the landlord has the discretion to determine the percentage of additional expenses to be allocated to the remaining tenants. This type of clause provides flexibility to the landlord and allows for a more customized approach based on the actual vacancy rates. 3. Gross Up at a Set Percentage: With this type, the clause specifies a fixed percentage by which the expenses will be grossed up. For example, if the gross up percentage is determined as 10%, the operating expenses or property taxes will be adjusted accordingly and distributed among the tenants. It's important for both parties involved in the lease agreement to thoroughly review and understand the specific terms and conditions associated with any Michigan Gross Up Clause. This will help ensure fair allocation and protection against unexpected expenses resulting from vacancies or decreases in occupancy within the property. Seeking legal advice is advised to draft a comprehensive and legally-binding lease agreement that incorporates the most suitable type of Michigan Gross Up Clause for the specific needs and objectives of the landlord and tenant.
