Contracts
In Arizona, a commercial 'gross-up' provision in a lease means:
AThe landlord can increase rent by more than the CPI adjustment
BFor variable expenses like utilities, the landlord grosses up actual expenses as if the building were fully occupied, ensuring fixed tenants pay their proportionate share even during vacancies✓ Correct
CThe tenant pays for all improvements
DThe lease escalates by a fixed gross amount annually
Explanation
A gross-up provision allows the landlord to calculate a tenant's proportionate share of variable expenses (like utilities, janitorial) as if the building were 100% occupied, preventing tenants from benefiting from below-market occupancy during lease-up.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
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