Alexander X. Jackins Published in BNA's Real Estate Law & Industry Report
"Understanding Operating Expense Gross-Ups as They Apply to Commercial Leases"

Real Estate attorney Alexander Jackins is published in the June 14 BNA Real Estate Law & Industry Report. The article discussed how costs associated with operating a commercial facility can vary substantially due to a range of factors. And landlords as well as tenants have an interest in preventing wide swings in expenses that must be allocated among all tenants. Alex noted that in most commercial leases, the tenant is required to pay rent and its share of the operating expenses for the property. He explained that a gross-up provision allows the landlord to "gross-up" or overstate certain operating expenses for the property that vary with fluctuations in occupancy level. Alex further explained that a gross-up provision is a necessary component of any commercial lease. When properly drafted, a gross-up provision will ensure that the tenants pay their fair share of the operating expenses while at the same time protecting the tenants from paying more in operating expenses then the parties intended when they negotiated the lease.

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