Terms

Gross Lease

A Gross Lease is a type of commercial lease where the landlord pays for the building's property taxes, insurance and maintenance. A gross lease can be modified in a number of ways to best meet the needs of a particular building's tenants (for example, a gross lease may or may not require the tenant to pay utility bills).

Modified Gross Lease

A Modified Gross Lease is a type of real estate rental agreement where the tenant pays base rent at the inception of the lease but in subsequent years pays the base plus a proportional share of some of the other costs associated with the property, such as property taxes, utilities, insurance and maintenance. For example, tenants of a property are required to pay their portion of the total heating expense of an office tower.

Industrial Gross Lease

In an Industrial Gross Lease, the tenant pays rent plus a share of services. Taxes and insurance are included in the base rent; however, at the end of the year any increases in taxes and insurance are passed on to the tenant as additional rent.

Net Lease

A Net Lease is a provision that requires the tenant to pay a portion or all of the taxes, fees and maintenance costs for the property in addition to rent. Net lease requirements are most commonly used with commercial real estate. There are three primary types of net leases: single (net), double (net-net) and triple (net-net-net).
Also referred to as a closed-end lease.

Double Net Lease

A Double Net Lease is an agreement in which the tenant is responsible for both property taxes and premiums for insuring the building.
Unlike a single net lease, which only requires the tenant to pay property taxes, a double net lease passes more expenses along in the form of insurance payments. The landlord is still held responsible for structural maintenance expenses. Each month, the landlord receives the base rent plus the additional payments. Double net leases are most commonly found in commercial real estate.

Triple Net Lease

A Triple Net Lease is a lease agreement that designates the lessee (the tenant) as being solely responsible for all of the costs relating to the asset being leased in addition to the rent fee applied under the lease. The structure of this type of lease requires the lessee to pay for net real estate taxes on the leased asset, net building insurance and net common area maintenance. The lessee has to pay the net amount of three types of costs, which how this term got its name.

Modified Net Lease

The Modified Net Lease is a compromise between the gross lease and the triple net. The landlord and tenant usually set up a split of maintenance expenses, while the tenant agrees to pay taxes and insurance. Utilities would likely also be negotiated in the modified net lease.

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