The Basics Of 'Gross-Up' Provisions

Law360, New York (November 7, 2011, 1:53 PM EST) -- To those who do not regularly deal with office leases, few concepts are as confusing as the gross up of operating expenses. Most tenants understand that in addition to base rent, tenants often directly reimburse their landlords for a portion of the building’s operating expenses, e.g., real estate taxes, casualty insurance, maintenance and utilities.

However, calculating such reimbursement for multitenant office buildings is less intuitive.

Stated simply, the concept of gross up is that, when calculating a tenant’s share of operating expenses for an office building...
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