Oregon Clause for Grossing Up the Tenant Proportionate Share

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Multi-State
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US-OL709
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This office lease clause states the conditions under which the landlord can and can not furnish any particular item(s) of work or service which would constitute an expense to portions of the Building during the comparative year.

Oregon Clause for Grossing Up the Tenant Proportionate Share is a provision commonly found in commercial lease agreements in the state of Oregon. This clause addresses the allocation and adjustment of operating expenses among tenants in multi-tenant buildings, ensuring fair distribution of costs. The term "grossing up" refers to the process of accounting for potential changes in operating expenses when a building is not fully occupied. It allows the landlord to estimate and include the expenses that would have been incurred if the building were fully occupied, thus avoiding a disproportionate burden on individual tenants. There are two main types of Oregon Clauses for Grossing Up the Tenant Proportionate Share: 1. Full Grossing Up Clause: This clause ensures that the tenant's proportionate share of operating expenses is based on the assumption that the building is fully occupied, regardless of the actual occupancy levels. The landlord is allowed to adjust the expenses to reflect what they would have been if all spaces were leased. This ensures that tenants pay their fair share, even if the building has vacancies. 2. Partial Grossing Up Clause: Unlike the full grossing up clause, this provision only allows for partial adjustment of operating expenses to account for potential vacancies. The landlord is permitted to include a certain percentage of the estimated expenses that would have been incurred if the building were fully occupied. This percentage is typically specified in the lease agreement and can vary depending on the building's historical vacancy rates or market conditions. The Oregon Clause for Grossing Up the Tenant Proportionate Share serves to protect all parties involved by promoting equitable distribution of operating expenses. It ensures that tenants are not unfairly burdened with excessive costs due to vacancies and maintains a level playing field for all tenants. Additionally, this clause provides transparency and clarity in the leasing process, allowing tenants to have a clear understanding of their financial obligations. In conclusion, the Oregon Clause for Grossing Up the Tenant Proportionate Share is an essential provision in commercial lease agreements. By considering potential vacancies and adjusting operating expenses accordingly, this clause ensures fair allocation of costs among tenants. Whether it is a full grossing up clause or a partial grossing up clause, the intention remains the same — to create a balanced and mutually beneficial leasing arrangement for all parties involved.

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FAQ

Proportionate Share of Operating Expenses means a fraction equal to the total Gross Rentable Area of the Premises divided by the total Gross Rentable Area of the Building.

Also known as tenant's pro rata share. The portion of a building occupied by the tenant expressed as a percentage. When a tenant is responsible for paying its proportionate share of the landlord's costs for the building, such as operating expenses and real estate taxes, the tenant pays this amount over a base year.

up is an additional amount of money added to a payment to cover the income taxes the recipient will owe on the payment. Grossing up is most often done for onetime payments, such as reimbursements for relocation expenses or bonuses. Grossing up can also be used to game executive compensation.

So, what is a gross-up provision? Simply stated, the concept of ?gross up provision? stipulates that if a building has significant vacancy, the landlord can estimate what the variable operating expense would have been had the building been fully occupied, and charge the tenants their pro-rata share of that cost.

Tenant's Share of Expenses means the product obtained by multiplying the sum of the amount of Operating Expenses plus the amount of the Property Taxes, in each case due and payable during the period in question, by the Tenant's Share of Expenses Percentage.

Correctly drafted, a gross up provision relates only to Operating Expenses that ?vary with occupancy??so called ?variable? expenses. Variable expenses are those expenses that will go up or down depending on the number of tenants in the Building, such as utilities, trash removal, management fees and janitorial services.

The pro-rata share is the percentage of expenses shared by the tenant for the shopping center or office building. In most leases, the pro-rata share is calculated as a fraction of the tenant's demised square footage divided by the total square footage of the shopping center or the building.

Many commercial leases, especially office leases, include a provision that allows landlords to ?gross up? operating expenses. That is, if the building is not fully occupied, the landlord is empowered to gross up or overstate the expenses as if the building is fully occupied (or nearly full).

Simply put, the rule states that operating expenses are equal to ½ of the gross annual rental income. So, if a property generates a rental income of $18,000 per year, operating expenses should be about $9,000 per year, excluding the mortgage payment and capital expenses.

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In other words, the lease allocates a certain amount to each tenant based on that tenant's proportionate share of the area within the building. Many ... How to fill out Clause For Grossing Up The Tenant Proportionate Share? When it comes to drafting a legal document, it's better to leave it to the professionals.May 19, 2022 — Let's say a tenant moves into a new building that is only partially occupied, with a lease that doesn't contain a gross-up clause. If each of the five tenants pays its 10% proportionate share of the “grossed-up” operating expense amount of $50,000, they would each pay $5,000, and the ... Sep 26, 2019 — The tenants have agreed to pay their proportionate share of the CAM expenses, and the lease should reflect just that—in our simple example ... May 4, 2020 — Without a gross-up provision, each tenant would pay fees of $12,500 made up of $10,000 fixed and $2,500 variable based on their 5% share. In ... Apr 24, 2001 — Some leases require tenants to pay their share of operating expenses in excess of the operating expenses for the facility during a base year. The Landlord shall furnish to the Tenant an estimate of the Proportionate Share of Taxes payable by the Tenant during the period so determined by the Landlord. Discover how the Gross Up Provision in a commercial lease is designed to protect landlords and remain fair to tenants, how it's calculated, and more. Feb 1, 2022 — ​​Tenants pay: Rent and utilities plus a proportionate share of the building's operating expenses—property taxes, insurance, and maintenance.

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Oregon Clause for Grossing Up the Tenant Proportionate Share