The foundational year used to calculate operating expense increases in gross leases.
In gross leases, the base year establishes the operating expense benchmark. The tenant only pays their share of expenses exceeding the base year amount. If the base year expenses are artificially low (due to low occupancy, tax abatements, or deferred maintenance), the tenant faces inflated pass-throughs in subsequent years. A base year set during a year when the building was 50% occupied could result in significantly higher pass-throughs than expected.
Stated in the "Operating Expenses" or "Expense Stop" section of gross leases. Typically defined as a calendar year (e.g., "2025") or the first full calendar year of the lease term.
Lextract uses vision AI to read your lease PDF natively (scanned or digital), then multi-pass AI validation identifies and extracts the base year. The AI searches for all pages of the document, then assigns a confidence score based on document quality and extraction certainty. Fields with lower confidence are flagged for human review.
Lextract automatically checks this field against its 20-rule red flag engine. Issues detected for base year:
Pro Rata Share
The tenant's fractional responsibility for total building operating expenses.
CAM Cap %
The maximum allowable annual increase for controllable operating expenses.
CAM Exclusions
Specific costs legally barred from being passed through to the tenant.
Audit Rights
Indicates whether the tenant possesses the legal right to audit the landlord's CAM ledgers.
The base year is the reference period (usually a calendar year) used to set the operating expense baseline in gross leases. The tenant does not pay additional operating expenses unless total building expenses exceed the base year amount. Any excess is passed through proportionally.
New buildings may have unusually low operating costs in their first year due to warranties, reduced maintenance needs, and tax abatements. If the base year is set during this period, the tenant faces large expense pass-throughs as costs normalize. Negotiating a base year gross-up provision mitigates this risk.
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