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 Mexico Gross Up Clause is an important provision that should be included in an Expense Stop Stipulated Base or Office Net Lease in order to ensure fair and equitable distribution of expenses between the landlord and tenant. This clause is typically used to address the issue of increased operating expenses that may arise due to changes in taxation, utility costs, or insurance premiums. One type of New Mexico Gross Up Clause that can be used in an Expense Stop Stipulated Base or Office Net Lease is the Pro Rata Gross Up Clause. Under this clause, if the expenses exceed the expense stop defined in the lease agreement, the landlord can pass on a portion of the excess expenses to the tenant based on their pro rata share of the total leased space. This ensures that each tenant bears the expenses proportionally to their occupancy. Another type of New Mexico Gross Up Clause that can be used is the Proportionate Gross Up Clause. This clause allows the landlord to allocate a portion of the cumulative expenses to the tenant, based on the increase in their leased space compared to the total leased space in the building. In other words, the tenant will be responsible for a proportionate share of the total expenses, taking into account any changes in their leased area over time. The New Mexico Gross Up Clause is essential in ensuring that tenants are not burdened with unforeseen increases in operating expenses. It provides a mechanism for landlords to adequately allocate these expenses among tenants, in a fair and reasonable manner. By incorporating this clause into an Expense Stop Stipulated Base or Office Net Lease, both parties can confidently navigate potential increases in costs and maintain a mutually beneficial agreement.
