Thus, there is no unanimity in the construction of a tax escalation clauses when changes of circumstances cause the original landlord not to be the one who actually pays the real estate taxes.
Most commercial leases contain a tax escalation clause which provides that the tenant will pay as additional rent his proportionate share of any increase in real estate taxes on the entire building.
The lease contained a tax escalation clause which stated that the tenant (Bryant Imports Inc.) shall pay as additional rent, 3 percent of any increase in real estate taxes over those assessed for the building for tax year 1974/1975.
The landlord in this case argued that the tax obligation on the building is increased even though the obligation to pay the taxes was merely shifted from the landlord, 1100 Associates, to another tenant, HBO; and that the shifting of the obligation to pay the tax does not nullify the effect of the tax escalation clause under the lease with Bryant Imports.
He stated that he would award the landlord the additional rent under the lease tax escalation clause. He stated that the majority's reliance upon precedents was misplaced.
Some owners, as well as tenants with escalation clauses
, will be paying higher taxes since the transitional assessment will be above last year's billable assessment.