Base (Expense) Year


For gross leases, the recoverable expenses for an annual time period above which a Tenant is required to pay its proportionate share of such expenses. Typically, the base year is the year in which a lease commences. Example: ABC Company signs a five-year lease which requires it to pay base rent plus its proportionate share of recoverable expenses in excess of the actual expenses incurred for the year 2000. The taxes for year 2000 were $5,000 as the base amount. If the taxes in the second year of the lease climb to $7,000, ABC only pays its proportionate share of the $2,000 increase as additional rent. The base year in this example is the year 2000.