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.
The Minnesota Gross Up Clause is a legal provision that can be included in a lease agreement, specifically in an Expense Stop Stipulated Base or Office Net Lease, to ensure fair and equitable distribution of operating expenses among tenants. This clause helps protect tenants from unexpected increases in operating costs and provides a mechanism for adjusting expenses based on changes in occupancy levels. There are two commonly used types of Minnesota Gross Up Clauses that can be incorporated into the lease agreement: 1. Gross Up Clause based on occupancy: This type of clause allows the landlord to "gross up" or increase the operating expenses proportionally based on the occupancy level of the building. For example, if the building is only 80% occupied, the landlord can adjust the operating expenses by a factor that reflects this decreased occupancy. This ensures that each tenant only pays their fair share of the expenses, taking into account the actual usage of the property. 2. Gross Up Clause based on building efficiency: This type of clause takes into consideration the size and efficiency of the building. It allows the landlord to allocate operating expenses based on the rentable square footage of each individual tenant's space compared to the total rentable square footage of the entire building. This method ensures that tenants occupying larger spaces bear a greater portion of the operating expenses, reflecting their higher usage of common areas and shared amenities. By including either of these Minnesota Gross Up Clauses in the Expense Stop Stipulated Base or Office Net Lease, tenants can ensure a more accurate and fair distribution of operating expenses. This creates transparency and minimizes any potential disputes over the sharing of common area expenses, utilities, maintenance, insurance, and other costs associated with the property. It is important for landlords and tenants alike to consult with legal professionals to understand the specific requirements, limitations, and applicability of the Minnesota Gross Up Clause in order to create a mutually beneficial and comprehensive lease agreement.
