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Form #1172Cost of Living and Tax Adjustments
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Cost of living and tax
adjustments.
The fixed annual rent reserved in this lease and
payable hereunder shall be adjusted, as of the times and in the manner set
forth herein:
(a). Definitions: For the purposes of this section,
the following definitions shall apply:
1. The term "base month" shall mean the full
calendar month during which the term of this lease commences.
2. The term "price index" shall mean the
"consumer price index" published by the Bureau of Labor Statistics of
the U.S. Department of Labor, New York City, all items, or a substitute index
appropriately adjusted.
3. The term "real estate taxes" shall mean
all taxes and assessments levied, assessed or imposed at any time by any
governmental authority upon or against the land and/or building of which the
demised premises form a part, and also any tax or assessment levied, assessed
or imposed at any time by any governmental authority in connection with the
receipt of income or rents from such land and/or building to the extent that
same shall be in lieu of all or a portion of any of such taxes or assessments
upon or against such land and/or building. If any real estate taxes are
permitted to be paid in installments, then all references in this section to
the dates on which real estate taxes are payable shall be deemed to refer to
the dates on which the installments are payable.
4. The term "base year" for taxes shall mean
either the first year for which the building is assessed by municipal authority
as completed and for which taxes for a full year are payable pursuant to such
assessment or shall mean the calendar year of the date of this lease whichever
is the later.
(b). Effective as of each January and July subsequent
to the base month, but in no event sooner than six months after the
commencement date of this lease, there shall be made a cost of living
adjustment of the annual rental rate payable hereunder. The July adjustment
shall be based on the percentage difference between the price index for the
preceding month of June and the price index for the base month. The January
adjustment shall be based on such percentage difference between the price index
for the preceding month of December and the price index for the base month.
1. In the event the price index for June in any
calendar year during the term of this lease reflects an increase over the price
index for the base month, then the fixed annual rent originally herein provided
to be paid as of the July 1st following such month of June (unchanged by any
adjustments under this section) shall be multiplied by 50% of the percentage
difference between the price index for June and the price index for the base
month, and the resulting sum shall be added to such fixed annual rent, effective
as of such July 1st. Such adjusted annual rent (plus any tax adjustment
computed hereunder) shall thereafter be payable hereunder, in equal monthly
installments, until it is readjusted pursuant to the terms of this lease.
2. In the event the price index for December in any
calendar year during the term of this lease reflects an increase over the price
index for the base month, then the fixed annual rent originally herein provided
to be paid as of the January 1st following such month of December (unchanged by
any adjustments under this section) shall be multiplied by 50% of the
percentage difference between the price index for December and the price index
for the base year, and the resulting sum shall be added to such fixed annual
rent effective as of such January 1st. Such adjusted annual rent (plus any tax
adjustment computed hereunder) shall thereafter be payable hereunder, in equal
monthly installments, until it is readjusted pursuant to the terms of this
lease.
The following illustrates the intentions of the
parties hereto as to the computation of the aforementioned cost of living
adjustment in the annual rent payable hereunder:
Assuming
that such fixed annual rent is $10,000, that the price index for the base year
was 102.0 and that the price index for the month of June in a calendar year
following the base year was 105.0, then 50% of
the percentage increase thus reflected, i.e., 50% ×
2.91% (3.0/102.0), or 1.47%, would be multiplied by $10,000, and such fixed
annual rent would be increased by $147 (plus any tax adjustment computed
hereunder) effective as of July 1st of such calendar year.
In the event that the price index ceases to use the
[year—year] average of 100 as the basis of calculation, or if a substantial
change is made in the terms or number of items contained in the price index,
then the price index shall be adjusted to the figure that would have been
arrived at had the manner of computing the price index in effect at the date of
this lease not been altered. In the event such price index (or a successor or
substitute index) is not available, a reliable governmental or other
nonpartisan publication evaluating the information theretofore used in
determining the price index shall be used.
No adjustments or recomputations, retroactive, or otherwise,
shall be made due to any revision which may later be made in the first
published figure of the price index for any month.
(c). Effective as of January 1 of each calendar year
following the base year, during the term of this lease, there shall be made a
tax adjustment of the annual rental rate payable hereunder. Such adjustment
shall be in addition to the cost of living adjustments computed as aforesaid.
The tax adjustment shall be based on the percentage increase between the real
estate taxes payable during each such calendar year following the base year and
the real estate taxes payable during the base year. Lessee will pay the
proportionate amount of any such increase based upon the ratio of the lessee's
demised premises to the aggregate of all the rentable area of the building
herein defined to be _________ sq. ft.
(d). In no event shall the fixed annual rent
originally provided to be paid under this lease (exclusive of the adjustments
under this section) be reduced.
(e). Any delay or failure of lessor, beyond July or
January of any year, in computing or billing for the rent adjustments provided
above, shall not constitute a waiver of or in any way impair the continuing
obligation of lessee to pay such rent adjustments hereunder.
(f). Notwithstanding any expiration or termination of
this lease prior to the lease expiration date (except in the case of a
cancellation by mutual agreement), lessee's obligation to pay rent as adjusted
under this section shall continue and shall cover all periods up to the lease
expiration date, and shall survive any expiration or termination of this lease.
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form, and you agree to abide by these terms. It is highly recommended that you have
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Your use of this site constitutes your acceptance of our terms of use and your agreement
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These forms are provided to assist business owners and others in understanding important
points to consider in different transactions. They are offered with the understanding
that no legal advice, accounting, or other professional service is being offered
by these documents or on this website. Laws vary in the different states. Agreements
acceptable in one state may not be enforced the same way under the laws of another
state. Also, agreements should relate specifically to the particular facts of each
situation. Therefore, it is important to consult legal counsel whenever utilizing
these forms. The Forms are not a substitute for legal advice YourFreeLegalForms.com
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