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 Oregon gross-up clause is a crucial component in base year leases, ensuring fair and equitable rent adjustments for tenants. This clause addresses the problem of variable operating expenses throughout the lease term. By incorporating a gross-up provision, landlords can account for these fluctuations and provide a normalized base year for calculating future rent. There are several types of Oregon gross-up clauses that can be used in a base year lease. The first is the Basic Gross-Up Clause, which simple adjusts the base year expenses to a constant level. This type of clause ensures that the tenant will only be responsible for any increase in costs beyond the base year. Another type is the Expense Stop Gross-Up Clause. This clause sets a cap or "stop" on the operating expenses that can be passed on to the tenant. If the expenses exceed the stop amount, the landlord will be responsible for the additional costs. This clause provides protection for the tenant against extreme increases in operating expenses. Furthermore, there is the Operating Expense Index Gross-Up Clause. This clause utilizes an operating expense index to calculate the adjustment in the base year. The index measures changes in operating expenses over time, ensuring that the base year remains accurate and reflective of market conditions. The size of the gross-up for each clause can vary depending on the specific terms negotiated between the landlord and tenant. It is essential for both parties to clearly define the method by which operating expenses will be assessed, what expenses will be included or excluded, and how adjustments will be made. In summary, regardless of the type used, an Oregon gross-up clause in a base year lease is crucial for maintaining fairness between landlords and tenants. It ensures that operating expenses are accurately accounted for, protecting the tenant from unforeseen spikes in costs while allowing the landlord to recover legitimate expenses.
