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.
A "Gross Up Clause" is an important provision that can be included in a base year lease agreement in New Mexico. This clause ensures that the tenant's rent expense accurately reflects the operating costs of the property, including taxes, insurance, and maintenance fees. In New Mexico, there are primarily two types of Gross Up Clauses that can be utilized in a base year lease: 1. Proportional Gross Up Clause: This type of Gross Up Clause allows the landlord or property owner to adjust the base year expenses so that the tenant's rent reflects the fair proportion of the property's operating costs. The base year is typically established as the first year of the lease term. Under this clause, if the operating expenses increase or decrease above the base year, the tenant's rent will be adjusted accordingly. 2. Budgeted Gross Up Clause: This type of Gross Up Clause involves the landlord or property owner estimating the operating expenses for the upcoming year. Based on these estimated expenses, the tenant's rent for the base year is adjusted so that it reflects the landlord's projected costs. Once the actual operating expenses for the year are determined, the tenant's rent may be further adjusted to reflect any variations. It is important to note that the specific language and details of a Gross Up Clause may vary depending on the lease agreement and the negotiation between the landlord and tenant. It is advisable for both parties to consult legal professionals or real estate experts to ensure that the provisions are properly drafted and appropriately reflect the unique circumstances of the property and the lease arrangement. In conclusion, a New Mexico Gross Up Clause is a contractual provision that helps maintain the fairness and accuracy of the tenant's rent expense by adjusting it to reflect the operating costs of the property. By incorporating a Gross Up Clause in a base year lease, landlords and tenants can ensure a transparent and equitable financial arrangement that considers changes in operating expenses over time.
