9.2 III. Operating Expenses— The Trickiest Clause

• Jurisdiction: New York

III. Operating expenses—
the trickiest clause

An operating expense clause permits building ownership to recover normal out-of-pocket costs of running a building. That should be all it does. Operating expenses listed in a tenant’s annual billing statement should correspond directly to benefits the tenant receives under the lease, and they ought to meet an objective standard such as GAAP (generally accepted accounting principles), not conventions particular to a given landlord.

When representing tenants in...