Free Tool: Calculator
Base Year Calculator
In a base year lease, you only pay your pro-rata share of expenses that exceed the base year amount. Landlords sometimes artificially deflate the base year or fail to gross it up, creating an artificial gap that inflates every future year's charge.
How base year leases work: You pay your pro-rata share of any operating expenses that exceed the base year amount. If the base year was not grossed up to reflect full occupancy, the starting point is artificially low, meaning you overpay every year going forward.
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Base Year Analysis
Enter your details above to verify your base year calculation.
Frequently Asked Questions
What is a base year stop in a commercial lease?
A base year stop means you pay your pro-rata share of any operating expenses that exceed the base year amount. The base year is typically the year you signed the lease or the first year of the lease term. If the base year amount is set artificially low, you will overpay every year going forward.
What does it mean when a base year is not grossed up?
Grossing up a base year means normalizing the expense total to reflect full-occupancy conditions. If the building was 70% occupied in your base year, actual expenses were lower than they would be at full occupancy. Without gross-up, the base year amount is depressed, and every year's charge looks like an increase above that lower baseline.
How do I check whether my base year calculation is correct?
Divide the expense delta (current year minus base year) by 100, then multiply by your pro-rata percentage. The result is what you should owe. Compare that to what your landlord billed. Any difference above $1 is worth investigating.
Can a landlord change the base year?
No. The base year is contractually defined in your lease. Landlords cannot unilaterally change it. If the wrong year is used as the starting point for your reconciliation, that is a billing error you can dispute.
What if current expenses are below the base year amount?
If current year operating expenses are at or below the base year amount, you owe nothing under a base year stop lease. No excess has occurred. Some landlords still issue a reconciliation charge in this scenario. That is an overcharge.