This office lease clause should be used in a base year lease. This form states that 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 in accordance with industry standards of the building operating costs. This amount shall be deemed to be the amount of building operating costs for the year.
Mississippi Gross Up Clause: Understanding its Importance in a Base Year Lease In the realm of commercial leasing, a Mississippi Gross Up Clause holds significant importance, particularly when it comes to determining the fair allocation of expenses between landlords and tenants. This clause works to provide a fair basis for calculating and distributing operating expenses in a base year lease. To elaborate further, let's address a few key areas related to the Mississippi Gross Up Clause. 1. Definition: The Mississippi Gross Up Clause in a base year lease is a provision designed to account for variations in occupancy levels throughout the year. It aims to ensure that tenants pay their proportionate share of operating expenses, even if the building is not fully occupied during the base year. 2. Base Year Lease: A base year lease is a common commercial lease structure where tenants pay a proportionate share of operating expenses incurred during a specific base year. This base year is typically the first year of the lease term, serving as a reference point for future expense calculations. 3. Entity Types: There aren't necessarily different types of Mississippi Gross Up Clauses; however, the specific language used within the clause may vary depending on the lease agreement and the parties involved. Landlords and tenants can negotiate and customize the clause to best suit their needs while adhering to applicable Mississippi laws and regulations. 4. Functionality: The primary function of the Mississippi Gross Up Clause is to adjust the tenant's share of expenses in accordance with the building's occupancy rate during the base year. It ensures that the tenant is not unfairly burdened with higher costs due to a lower occupancy rate during that period. 5. Expense Allocations: Expenses covered under the Mississippi Gross Up Clause may include common area maintenance charges, property taxes, insurance premiums, utilities, repairs, and similar operating expenses associated with the leased premises. The clause outlines the methodology for allocating these costs between the landlord and tenants, taking into account the occupancy level fluctuations during the base year. 6. Calculation Methods: Different methods can be employed to calculate the grossed-up expenses. Generally, the grossed-up expenses are determined by multiplying the actual expenses incurred during the base year by a "grossing-up" factor, which reflects the hypothetical amount that would have been incurred had the building been fully occupied for the entire year. 7. Benefits for Tenants: By incorporating a Mississippi Gross Up Clause, tenants are safeguarded against abrupt increases in operating expenses resulting from low occupancy rates during the base year. It provides tenants with a sense of stability and fairness while contributing to a healthy landlord-tenant relationship. To conclude, the inclusion of a well-drafted Mississippi Gross Up Clause in a base year lease can bring clarity and fairness to expense allocation between landlords and tenants. It ensures that each party bears their proportionate share of operating expenses, despite potential occupancy fluctuations. It is crucial to consult with legal professionals and property experts when drafting or reviewing lease agreements to accurately incorporate the necessary clause while adhering to the specific requirements of Mississippi law.
