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.
Wyoming Gross Up Clause That Should be Used in an Expense Stop Stipulated Base or Office Net Lease In a Wyoming gross up clause, it is important to understand the provisions and implications when drafting an expense stop stipulated base or office net lease. This legal instrument ensures fair and equitable distribution of expenses among tenants, and outlines the responsibilities of both the landlord and the tenant regarding reimbursement for operating expenses. The Wyoming gross up clause refers to a specific provision within the lease that allows the landlord to "gross up" the tenant's share of expenses in case the occupancy rate in the building is less than 100%. Essentially, it attributes a portion of the expenses that would have been incurred if the occupancy rate was at its peak to the tenants. The purpose of a gross up clause is to prevent an uneven distribution of expenses among tenants, especially in cases where a tenant has negotiated a lower base rent but is still required to contribute to common area maintenance charges, property taxes, insurance, or other operating expenses. This clause ensures that tenants bear a proportionate share of the expenses to maintain a fair and balanced financial burden on all parties involved. Types of Wyoming Gross Up Clauses: 1. Full Gross Up Clause: This type of gross up clause allows the landlord to calculate the actual full and unreduced expenses associated with the property and then attributes a portion of these expenses to each tenant based on their pro rata share. The pro rata share is determined by the leased area of the tenant in relation to the total leasable area of the building. 2. Partial Gross Up Clause: In a partial gross up clause, the landlord determines an estimated expense to be attributed to each tenant based on a predetermined percentage, regardless of the actual incurred expenses. This method simplifies calculations and provides more predictability for tenants, but may not accurately reflect the true expenses of the property. 3. Net Lease Gross Up Clause: In a net lease gross up clause, the tenant is responsible for paying a fixed share of expenses as stipulated in the lease, without any adjustment for occupancy fluctuation. This type of clause is less common in Wyoming and may not provide tenants with an equitable distribution of expenses, especially if the occupancy rate significantly decreases. 4. Gross Up Clause with Expense Cap: This clause limits the tenant's maximum liability for expenses, even if the actual expenses exceed the capped amount. It provides protection to tenants by preventing unexpected spikes in expenses, offering financial certainty within the lease agreement. It is crucial to consult a legal professional experienced in Wyoming real estate laws to draft an appropriate gross up clause tailored to the specific needs and circumstances of the lease agreement. Furthermore, consideration should be given to the specific property, its occupancy rate, anticipated expenses, and desired level of fairness and transparency among tenants.
