This office lease form is regarding the renewal or other extension of the lease as it relates to the "Base Year Taxes" and the "Base Year for Operating Expenses".
Tennessee Option to Renew that Updates the Tenant Operating Expense and Tax Basis: One of the crucial aspects of commercial leasing agreements in Tennessee is the option to renew clauses that provide tenants with the opportunity to extend their lease term beyond the initial agreement. An important consideration within these clauses is the update of the tenant's operating expenses and tax basis. This is particularly relevant as it impacts the financial obligations and responsibilities of both the tenant and landlord for the renewed lease period. Typically, there are different types of Tennessee Option to Renew clauses that address the update of the tenant's operating expenses and tax basis, including: 1. Fixed Percentage Increase: This type of option to renew involves a fixed increase in the tenant's operating expenses and tax basis, usually expressed as a predetermined percentage. For example, the lease agreement may state that the tenant's operating expenses and tax basis will increase by 3% annually upon renewal. 2. Consumer Price Index (CPI) Adjustment: Some lease agreements in Tennessee may incorporate a CPI adjustment mechanism to determine the update of the tenant's operating expenses and tax basis. The CPI is an indicator of inflation that measures changes in the price level of a basket of goods and services. The tenant's operating expenses and tax basis would be adjusted based on the changes in the CPI during the lease term. 3. Negotiated Adjustment: In certain cases, the tenant and landlord may negotiate the update of operating expenses and tax basis during lease renewal. This allows both parties to consider specific factors such as market conditions, property improvements, or changes in tax regulations that may impact the tenant's financial obligations. Any negotiated adjustments should be documented clearly in the lease agreement. It's crucial for tenants in Tennessee to carefully review and understand their option to renew clauses, particularly with regard to the update of operating expenses and tax basis. This understanding ensures that tenants have clarity on their financial responsibilities during the renewed lease term. Consulting with legal professionals who specialize in commercial leasing in Tennessee is advisable to ensure tenants fully comprehend and negotiate these clauses to their advantage.
