What is Expense Stop?

Definition

An expense stop is a dollar threshold above which tenants begin to share operating expenses. Unlike a base year, which references actual historical costs, an expense stop is typically a fixed dollar amount per square foot negotiated at lease signing. Below the stop, the landlord bears all operating costs; above it, tenants pay their pro-rata share of the excess. Expense stops are common in gross and modified gross leases and require careful tracking because the stop amount remains fixed while actual expenses increase annually. Landlords must ensure their billing systems correctly compare current-year expenses against the contractual stop amount rather than prior-year actuals.