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 New Hampshire Gross Up Clause is a crucial component that should be included in an Expense Stop Stipulated Base or Office Net Lease. It is designed to protect both landlords and tenants by ensuring that any fluctuations in operating expenses are adequately managed. In simple terms, the Gross Up Clause allows the landlord to adjust the expense base to account for any additional expenses incurred due to changes in the building's occupancy levels. This adjustment ensures that the tenant's proportional share of expenses remains fair and consistent, regardless of the building's occupancy fluctuations. There are primarily two types of New Hampshire Gross Up Clauses commonly used in leases: 1. Occupancy Gross Up Clause: This clause allows the landlord to adjust the expense base if the building's occupancy falls below a specified threshold. For example, if the building is designed to operate at full capacity, typically 90%, the landlord can increase the expense base to cover the lost income resulting from lower occupancy. This type of clause ensures that tenants do not unfairly bear the burden of decreased revenue due to vacant spaces. 2. Expense Gross Up Clause: This clause allows the landlord to adjust the expense base to cover any increases in operating expenses that are beyond the control of both parties. These expenses can include property taxes, insurance premiums, or utility costs. By implementing this clause, the landlord ensures that tenants' proportionate share of expenses remains equitable, regardless of uncontrollable external factors that may lead to cost fluctuations. Including a New Hampshire Gross Up Clause in an Expense Stop Stipulated Base or Office Net Lease provides transparency and accountability, offering protection to both landlords and tenants. Tenants are assured that they will only pay their fair share of expenses, while landlords can manage any unforeseen expenses without overwhelming their tenants. To summarize, the New Hampshire Gross Up Clause in an Expense Stop Stipulated Base or Office Net Lease is a crucial provision that allows landlords to adjust the expense base to ensure fair allocation of expenses. The two main types of clauses, the Occupancy Gross Up Clause and Expense Gross Up Clause, provide flexibility for landlords to manage changes in occupancy levels and uncontrollable expense fluctuations. Including these clauses in the lease agreement promotes fairness, transparency, and a balanced financial relationship between landlords and tenants.
