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.
South Carolina Gross up Clause: A South Carolina Gross up Clause is a provision commonly used in Expense Stop Stipulated Base or Office Net Leases to establish how operating expenses are allocated among tenants. This clause ensures that tenants pay their fair share of expenses by accounting for fluctuations in the overall occupancy and the building's operating costs. The Gross up Clause in a South Carolina lease can be categorized into different types: 1. Pro Rata Gross up Clause: In this type of clause, tenants are required to pay their proportionate share of operating expenses based on their leased square footage. The total operating expenses incurred by the landlord are divided among all tenants according to their relative space, ensuring a fair distribution. 2. Percentage Gross up Clause: Here, the operating expenses are calculated based on a predetermined percentage of the total gross leasable area within the property. This fixed percentage can be specified in the lease agreement and is used to determine each tenant's share of expenses. It provides consistency and simplicity in cost allocation. 3. Expense Stop Gross up Clause: This type of gross up clause sets a maximum amount or threshold for reimbursable operating expenses that tenants are obliged to pay. Once the expenses exceed the predetermined 'stop' or cap, the landlord is responsible for covering the excess costs. This protects tenants from unexpected surges in operating expenses while still allowing them to share in reasonable cost increases. 4. Base Year Gross up Clause: A Base Year Gross up Clause utilizes a starting point or base year in which the tenant's share of expenses is calculated. In subsequent years, any increase in operating expenses is passed on to the tenant based on the percentage increase from the base year. This clause provides transparency by tracking cost changes relative to a fixed period. 5. Consumer Price Index (CPI) Gross up Clause: Under this type of South Carolina Gross up Clause, tenants' share of operating expenses is adjusted annually based on changes in the Consumer Price Index. The CPI reflects general inflation and allows for adjustments to ensure fairness and prevent tenants from being burdened with excessive cost escalations. When incorporating a South Carolina Gross up Clause into an Expense Stop Stipulated Base or Office Net Lease, it is essential to carefully consider the specific needs and circumstances of the parties involved. Seeking legal advice and drafting a comprehensive lease agreement that clearly outlines the chosen gross up clause type can help establish fair cost sharing practices and avoid potential disputes down the line.
