Gross Lease
Candlefocus EditorIn a modified gross lease, the tenant and landlord agree to a set amount of rent and one or two additional charges such as taxes and insurance, that are calculated separately from the base rent. The landlord pays for any maintenance or repair expenses associated with the property, as well as utilities.
In a fully serviced gross lease, a lump sum of rent is paid by the tenant and the owner pays all utility costs, property taxes, and insurance premiums. This type of lease is usually only used when the landlord is expecting to make a profit from the property and has the flexibility to implement any necessary renovations and repairs.
Both types of gross leases are different from net leases, which require the tenant to pay one or more of the costs associated with the property. Since a net lease puts the majority of the burden of for utilities and other operating costs on the tenant, it is considered less attractive than a gross lease.
Overall, a gross lease is a simple, straightforward agreement which allows the renter to pay on a consistent basis, and offers them the financial security of knowing exactly what the costs associated with the lease are. Additionally, since the landlord is responsible for any related expenses, a gross lease can have a lower rental rate than a net lease, making it an attractive option for both parties.