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Maryland commercial real property leases

When a commercial tenant enters into a lease, it could be a gross lease or a net lease. A gross lease means that the rent will encompass all of the expenses related to renting a building. A net lease means that the tenant pays a lower rate of rent, but it will also have to pay certain additional expenses.

A net lease can be in the form of a single, double or triple net lease. In a single net lease, the tenant pays a portion of the property taxes in addition to utilities and janitorial services. In a double net, the tenant pays a portion of the property taxes and insurance. In a triple net lease, the tenant pays for a portion of property taxes, insurance and common area utilities.

The modified gross lease may be popular for tenants because rates are negotiated ahead of time. This means if insurance or property taxes go up, the tenant will pay the same rate as stipulated in the rental agreement. However, the landlord makes more money from the deal if prices go down. It may be easier for a tenant to go with such a lease because rent, utility and janitorial costs are all fixed for a set period of time.

Negotiating commercial leases may be more complex than negotiating a lease for an apartment or a house. Therefore, it may be worthwhile to enlist the help of a commercial real estate attorney before proceeding. The attorney can review the lease agreement to ensure that the business client is getting the best deal on an available building. It may also be possible for the attorney to help the client resolve any issues that may come up during the lease period.

Source: 42 Floors, "3 Different Types of Commercial Real Estate Leases", Mike Cobb, Feb. 7, 2015

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