SAE Appraisal Practice Exam 2026 - Free Appraisal Practice Questions and Study Guide

An expense stop clause in a lease is primarily a benefit to the lessor, which generally refers to the landlord or property owner. This clause establishes a threshold for operating expenses. Under this arrangement, the lessor agrees to cover operating costs up to a certain amount, while any costs exceeding that threshold are passed on to the lessee.

The benefit to the lessor lies in the predictability and control over their financial exposure. By capping their liability for operating expenses, the lessor can better manage their budget and minimize unexpected expenses. This arrangement also incentivizes the lessor to maintain efficiency in property management since they are motivated to keep costs below the established stop.

The lessee may face higher costs if operating expenses rise significantly, meaning their financial burden will increase beyond the stop. Thus, while the lessee does benefit from a clear outline of responsibilities, the primary advantage of the expense stop clause resides with the lessor, who can limit their financial risks associated with variable operating costs.