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.
Rhode Island Gross Up Clause in Expense Stop Stipulated Base or Office Net Lease: A Detailed Description In a commercial lease agreement, particularly in the case of expense stop stipulated base or office net leases, the inclusion of a Rhode Island gross up clause becomes crucial. This provision ensures that the tenant's rent remains constant, even when the operating expenses of the property increase beyond the predetermined limit, commonly known as the expense stop. A gross up clause serves to protect the tenant from bearing the financial burden of unpredictable or excessive operating expenses. Rhode Island Gross Up Clauses vary based on specific requirements and circumstances, but typically fall into two main categories: 1. Direct Expense Gross Up Clause: This type of gross up clause is designed for leases where the operating expenses are directly passed on to the tenants. Under a direct expense gross up clause, the landlord is responsible for ensuring that the tenant's rent remains constant, regardless of increases in operating expenses beyond the expense stop. If the total operating expenses exceed the expense stop, the landlord will bear the excess costs. 2. Indirect Expense Gross Up Clause: In leases where the operating expenses are indirectly apportioned among tenants, an indirect expense gross up clause is used. This clause allows the landlord to distribute any excess operating expenses equally among the tenants, ensuring that all parties share the burden proportionately. The amount of the gross up may vary based on the allocation method specified in the lease agreement. In Rhode Island, the inclusion of a gross up clause is essential due to fluctuating operating expenses and the need for tenants to have cost predictability. Without a gross up clause, tenants may face sudden and unexpected increases in their rent due to rising operational costs, adversely affecting their financial stability and business viability. When it comes to implementing a Rhode Island gross up clause, careful attention should be paid to lease agreement details. The clause should outline the specific expenses to be grossed up, the calculation methodology, and any limits or thresholds that need to be considered. It is advisable for both landlords and tenants to consult legal professionals familiar with Rhode Island lease laws to ensure compliance and protection of their respective interests. Keywords: Rhode Island, Gross up clause, Expense stop stipulated base, Office net lease, Direct expense gross up clause, Indirect expense gross up clause, Operating expenses, Lease agreement, Financial burden, Predictable costs, Expense stop, Tenant rent, Landlord responsibility, Operational costs.
