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.
Title: Understanding Tennessee Gross Up Clauses for Base Year Leases: A Comprehensive Overview Introduction: A Tennessee gross up clause is a crucial provision to include in a base year lease to ensure fair distribution of expenses, particularly when it comes to operating expenses. This article aims to provide a detailed description of the Tennessee gross up clause and its importance in base year leases. Additionally, we will explore different types of gross up clauses commonly used in Tennessee lease agreements. Keywords: Tennessee gross up clause, base year lease, operating expenses, fair distribution, lease agreements 1. What is a Tennessee Gross Up Clause? A Tennessee gross up clause is a contractual provision used in base year leases to account for variations in tenants' share of operating expenses. It aims to ensure that each tenant's proportionate share remains consistent even if the total operating expenses fluctuate throughout the lease term. 2. Importance of Gross Up Clauses in Base Year Leases: Including a gross up clause in a base year lease offers several advantages, such as: — Equal Distribution: It ensures that tenants pay their fair share of operating expenses, regardless of fluctuations in overall expenses. — Cost Predictability: A gross up clause provides stability and predictability by offering a consistent proportionate share for tenants, eliminating surprise cost escalations. — Encourages Tenant Retention: With fair expense allocation, tenants are more likely to stay, promoting ongoing occupancy and a stable income stream for landlords. 3. Types of Tennessee Gross Up Clauses: Depending on the specifics of the lease agreement and the parties involved, different types of gross up clauses can be implemented. Some commonly used ones include: — Expense Stop Gross Up Clause: This type of gross up clause establishes a predetermined cap on operating expenses for tenants. Should the total expenses exceed the stipulated limit, a gross up provision kicks in to distribute the remaining expenses fairly among tenants. — Market Gross Up Clause: A market gross up clause allows adjustments based on market conditions, enabling tenants to share the burden of increases in operating expenses resulting from external factors. The gross up provision ensures that tenants continue to pay their proportionate share in the face of inflationary conditions. — Proportional Gross Up Clause: With this clause, the gross up provision is triggered when the base year expenses deviate from the actual expenses incurred. When the base year expenses exceed or fall short of the actual expenses, a proportionate adjustment is made to allocate expenses fairly among tenants. Conclusion: Tennessee gross up clauses play a vital role in base year lease agreements, ensuring fair distribution of operating expenses and providing stability for both landlords and tenants. By implementing suitable types of gross up clauses tailored to the specific lease agreement, parties can avoid potential discrepancies and maintain a harmonious landlord-tenant relationship throughout the lease term. Keywords: Tennessee gross up clause, base year lease, operating expenses, fair distribution, expense stop gross up clause, market gross up clause, proportional gross up clause.
