Understand the Different types of leases
When someone wants to rent a business space, they usually sign a lease. A lease is like a special agreement between the person who owns the property (we call them the landlord) and the person who wants to rent it (we call them the tenant). Now, there are different types of leases that landlords and tenants can sign. Here are the most common ones:
Full-Service Lease: This is like a bundle deal. The tenant pays one monthly fee that includes everything they need to run their business, like rent, utilities, maintenance, and other services.
Net Lease: This type of lease is like a cafeteria menu. The landlord charges the tenant separately for things like property taxes, insurance, and maintenance, in addition to the base rent.
Single Net Lease: In a single net lease, the tenant is responsible for paying property taxes in addition to the base rent. The landlord is responsible for paying for all other expenses, such as insurance, maintenance, and utilities.
Double Net Lease: In a double net lease, the tenant is responsible for paying property taxes and insurance, in addition to the base rent. The landlord is responsible for paying for maintenance and utilities.
Triple Net Lease: In a triple net lease, the tenant is responsible for paying property taxes, insurance, and maintenance costs, in addition to the base rent. The tenant is also responsible for paying for utilities unless the lease agreement states otherwise. This type of lease puts the majority of the financial responsibility on the tenant, making it a popular option for commercial landlords.
Percentage Lease: This is a special type of lease that’s mostly used for retail spaces. The tenant pays a base rent plus a percentage of their sales revenue. This means that if the tenant makes a lot of money, the landlord will get a bigger share of it.
Gross Lease: A gross lease is a type of lease where the tenant pays a fixed amount of rent each month, and the landlord is responsible for paying all the property expenses, including utilities, taxes, insurance, and maintenance costs. This is a popular option for tenants who want to avoid unexpected expenses and prefer a predictable rental payment.
Modified Gross Lease: A modified gross lease is a combination of a gross lease and a net lease. In this type of lease, the landlord and tenant agree on a fixed rent amount that includes some or all of the property expenses. The tenant may still be responsible for paying some additional expenses, like utilities or maintenance costs. This type of lease is often negotiated between the landlord and tenant to create a mutually beneficial agreement.
Ground Lease: This type of lease is like borrowing a piece of land from someone for a really long time, like 50 years or more. The tenant pays the landlord rent for the land, but they usually have to build their own building on it.
I hope this information helps you better understand the different types of commercial property leases available. We would be happy to discuss your specific needs and help you find the perfect property and lease agreement for your business.