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.
The Houston Texas Gross Up Clause is a crucial component that should be integrated into an Expense Stop Stipulated Base or Office Net Lease. This clause ensures fair distribution of expenses for tenants in a commercial lease agreement. By implementing a gross up clause, it helps to alleviate the burden on tenants by relieving them from excessive expense reimbursements. In essence, the Houston Texas Gross Up Clause allows landlords to "gross up" the actual expenses incurred in operating and maintaining the property. Typically, the expenses are shared among all tenants proportionately based on their square footage. However, this clause ensures that tenants are not liable for paying expenses that are not directly related to their leased space. There are two common types of Houston Texas Gross Up Clauses that are frequently used in Expense Stop Stipulated Base or Office Net Leases: 1. Direct Expense Gross Up Clause: Under this clause, the landlord calculates the total actual expenses incurred for the entire property and then redistributes it among the tenants based on their pro rata share. This ensures a fair distribution of expenses, preventing any undue burden on individual tenants. 2. Expense Stop Gross Up Clause: This type of clause caps the expenses that tenants are responsible for paying. Once the expenses reach a predetermined limit (also known as the "expense stop"), any further costs are absorbed by the landlord. The expense stop is typically calculated based on a per square foot or per-tenant basis. Implementing a Houston Texas Gross Up Clause in an Expense Stop Stipulated Base or Office Net Lease provides several benefits. First, it creates transparency by ensuring tenants only pay their fair share of property expenses. Second, it safeguards tenants from unforeseen or excessive expenses that may arise during the lease term. Lastly, it establishes a sense of fairness and equitable distribution of expenses among all tenants, promoting a positive and harmonious lease environment. In conclusion, the Houston Texas Gross Up Clause is an essential provision in commercial leases. Whether it is a Direct Expense Gross Up Clause or an Expense Stop Gross Up Clause, incorporating this clause ensures fairness, transparency, and protection for tenants in bearing their proportionate share in property expenses.
