If you are ready to lease a new building for your business and you are not sure which of the available types of commercial real estate leases is right for you, it is wise to take your time to learn the facts. A Long Island, NY real estate closing lawyer can help you learn more about how each type of commercial real estate lease works.
What are Gross Commercial Real Estate Leases?
A gross lease is one of the more popular options for businesses. In this arrangement, the tenant pays the landlord only the base rent. This can save a company a significant amount of money, especially if the costs of operating the property increase. If they have signed a gross lease agreement, a business does not need to concern themselves with any rising costs that relate to the building.
However, sometimes a landlord can stipulate that any unexpected rising costs can give them a reason to raise the rent. The base rent might also be higher in this kind of commercial real estate lease than it would be in leases where a tenant agrees to take on some of the building’s other costs.
What are Net Commercial Real Estate Leases?
A net lease is a favorable type of agreement for commercial real estate owners. They can collect more than rent from a tenant when they have signed this type of commercial real estate lease.
The costs that can be paid on a net lease include three different expense categories. They are taxes, maintenance, and insurance. In a gross lease, a landlord is responsible for all of these. In a net lease, a tenant can be on the hook for one, two, or even all three of them.
This means that net leases can be broken down into three more types of commercial real estate leases. You have a single net lease, where a tenant agrees to be responsible for one of those three expenses. Then there is a double net lease where they pay for two of the expenses. Finally, we have the triple net lease. As you may have guessed, a tenant is responsible for taxes, maintenance, and insurance costs here.
What is a Modified Gross Lease?
This type essentially sits between the other two types of commercial real estate leases we have mentioned already. Like in a gross lease, the tenant is responsible for paying the rent. They are also paying some share of the building’s operating costs. They may not be paying the taxes, insurance, or maintenance costs in full like they would in a net lease, but they are somewhat responsible for paying the landlord back for some of the costs they incur when operating a building.
Contact an Experienced Real Estate Attorney
If you have questions about your lease or you are looking for the best way to capitalize on your investment property, we can help. Contact David A. Gallo and Associates LLP and schedule a consultation. We can answer any questions that you may have about the types of leases, state laws, and regulations.