What is a base year gross-up and why does it matter for my law firm's CAM costs?

A base year gross-up adjusts the base year operating expenses upward to reflect what costs would have been at 95% (or a specified) building occupancy. Without it, a low-occupancy base year produces artificially low fixed costs, and every future escalation is measured against that deflated baseline, creating inflated annual charges for the entire lease term. This is one of the most valuable protections to negotiate and audit.

My building was sold last year. Can the landlord pass through the full property tax increase from the reassessment?

Depends on your lease. Some leases include a "tax reassessment cap" that limits pass-throughs from ownership-transfer reassessments. Others permit the full increase. Even without a cap, you should request the actual tax bill to verify the landlord is not adding a markup. CamAudit extracts the tax pass-through terms from your lease.

What is a base year gross-up and why does it matter for my law firm's CAM costs?

A base year gross-up adjusts the base year operating expenses upward to reflect what costs would have been at 95% (or a specified) building occupancy. Without it, a low-occupancy base year produces artificially low fixed costs, and every future escalation is measured against that deflated baseline, creating inflated annual charges for the entire lease term. This is one of the most valuable protections to negotiate and audit.

My building was sold last year. Can the landlord pass through the full property tax increase from the reassessment?

Depends on your lease. Some leases include a "tax reassessment cap" that limits pass-throughs from ownership-transfer reassessments. Others permit the full increase. Even without a cap, you should request the actual tax bill to verify the landlord is not adding a markup. CamAudit extracts the tax pass-through terms from your lease.

CAM Audit for Law Firms

Legal practices occupying premium Class A office space in downtown and suburban markets. Full-Service Gross leases with Base Year stops are standard. Law firms are sophisticated tenants but often rely on office managers rather than lease experts for CAM oversight, creating exposure to base year errors. Annual CAM exposure for this tenant type ranges up to $30,000–$80,000. CamAudit runs 12 forensic detection rules specific to your lease structure in under five minutes.

Typical Lease Structure

Full-Service Gross with Base Year Stop

Avg. Locations

1–10

Annual CAM Exposure

$30,000–$80,000

Lease Structure

Full-Service Gross with Base Year Stop, landlord pays all operating expenses up to the base year amount; tenant pays the proportionate share of increases above that amount. Base year is typically the first year of occupancy.

CAM Vulnerabilities for Law Firms

Landlord fails to gross up the base year to 95% occupancy, establishing an artificially low baseline that produces inflated escalations every subsequent year. Janitorial and security costs are not grossed up consistently. Property tax resets following building sales are passed through at the full increase without adjustment.

Most Common Overcharges

1Base year operating expenses not grossed up to 95% occupancy, inflating all future escalations
2Janitorial services grossed up in current year but not in base year, creating artificial delta
3Security costs reclassified from capital to operating expense mid-lease
4Property tax post-sale reassessment passed through in full without cap or phase-in
5Administrative fees added to CAM pool without express lease authority

Watch For This Trigger

Internal accounting catches a Year 2 reconciliation statement showing 30% operating expense escalation despite no material change in building services or occupancy.

Detect Overcharges in Your Law Firm Lease

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Precedent & Case Context

275 Washington Street Corp litigation established that Class A office landlords must apply the gross-up provision consistently to both the base year and current year expenses. Inconsistent application, grossing up current year but not base year, constitutes a breach of the lease.

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Related Resources

ResourcesLease Types and CAM Structures ToolsFree CAM Audit Tools ToolsPro-Rata Share Calculator GlossaryCAM Glossary

Frequently asked questions

This page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.