How do operating expense stops work in a Full-Service Gross lease?

In a Full-Service Gross lease, the landlord covers all operating expenses up to the base year amount (the "stop"). In subsequent years, you pay your pro-rata share of the increase above that stop. The accuracy of the stop calculation, especially whether the base year was properly grossed up, determines whether your escalations are correct for the entire lease term.

Can I audit my landlord's operating expense calculations?

Yes, if your lease contains an audit rights clause, which most professional office leases do. The clause specifies a time window (commonly 60–180 days after receiving the reconciliation statement) and the documentation you can request. CamAudit helps you identify discrepancies before the audit window closes.

How do operating expense stops work in a Full-Service Gross lease?

In a Full-Service Gross lease, the landlord covers all operating expenses up to the base year amount (the "stop"). In subsequent years, you pay your pro-rata share of the increase above that stop. The accuracy of the stop calculation, especially whether the base year was properly grossed up, determines whether your escalations are correct for the entire lease term.

Can I audit my landlord's operating expense calculations?

Yes, if your lease contains an audit rights clause, which most professional office leases do. The clause specifies a time window (commonly 60–180 days after receiving the reconciliation statement) and the documentation you can request. CamAudit helps you identify discrepancies before the audit window closes.

CAM Audit for Accounting Firms

CPA practices and professional accounting firms occupying Class A and Class B office space. Similar to law firms in lease structure but often in smaller footprints. Partner-level oversight of lease costs is typically low, creating recurring exposure to base year and gross-up errors. Annual CAM exposure for this tenant type ranges up to $10,000–$50,000. 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 or Modified Gross

Avg. Locations

1–5

Annual CAM Exposure

$10,000–$50,000

Lease Structure

Full-Service Gross with Base Year Stop or Modified Gross, tenant pays base rent and operating expense escalations above the base year amount.

CAM Vulnerabilities for Accounting Firms

Base year not grossed up to standard occupancy level. Operating expense escalations exceed the actual cost increase due to landlord calculation errors. Electricity and HVAC costs billed above lease-permitted rates for after-hours use.

Most Common Overcharges

1Base year not grossed up to 95% occupancy, inflating multi-year escalation amounts
2After-hours HVAC billed at a rate above the lease-specified hourly cap
3Janitorial services billed at current-year grossed-up rate without matching base year adjustment
4Administrative overhead and above-grade management salaries included in operating expenses
5Operating expense escalations calculated using current-year denominator rather than lease-specified denominator

Watch For This Trigger

The first operating expense reconciliation statement arrives in Year 2 showing escalations that exceed the negotiated estimate by more than 20%.

Detect Overcharges in Your Accounting Firm Lease

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Precedent & Case Context

Accounting tenants in multi-tenant office buildings have recovered CAM overcharges by demonstrating that the landlord applied the gross-up provision to current year expenses but not to the base year, creating a mathematically invalid comparison that inflated every annual escalation.

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Other Tenant Types

Retail Store Restaurant Medical Office Dental Office Gym & Fitness Center Pharmacy Bank & Financial Institution Law Firm View all tenant types

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.