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.
The New Hampshire Gross Up Clause is a vital component to include in a Base Year Lease agreement. This clause ensures that tenants are not burdened with additional expenses when the operating costs of a commercial property increase during the lease term. By understanding the intricacies of this clause, landlords and tenants can make informed decisions that protect their financial interests. The New Hampshire Gross Up Clause functions by setting a base year as a benchmark for operating expenses, typically the first year of the lease term. It establishes a fair sharing arrangement by which the tenant's share of operating expenses is increased when compared to the base year. This ensures that the tenant is not disproportionately impacted when operating costs rise in subsequent years. There are two main types of New Hampshire Gross Up Clauses that can be used in a Base Year Lease: 1. Expense Stop Gross Up Clause: This type utilizes an expense stop, which means that the tenant will only be responsible for a fixed amount of operating expenses. If the actual costs exceed this amount, the landlord will absorb the excess. However, it is crucial to set an appropriate expense stop limit to prevent the risk of landlords shouldering excessive expenses. 2. Variable Gross Up Clause: This type takes into account the fluctuating operating expenses during the base year. Here, the tenant will pay a proportionate share of the increased operating costs, relative to the base year. This ensures the tenant's payments align with any rising expenses. The New Hampshire Gross Up Clause is designed to maintain fairness and protect both the landlord's and tenant's interests. It ensures that tenants are not burdened with sudden and substantial increases in operating costs, while landlords can cover their expenses without shouldering excessive financial responsibilities. To effectively implement a New Hampshire Gross Up Clause in a Base Year Lease, it is crucial to engage legal professionals experienced in commercial real estate law. By understanding the nuances of the agreement and considering variables such as expense stop or variable gross up clauses, landlords and tenants can create mutually beneficial lease terms that address the potential unpredictability of operating expenses while maintaining financial stability.
