Small Business Owners Commercial Leasing Tip #2: What are you paying for rent? Do you have one of these: Net Lease, Net-Net Lease, Triple Net Lease or Modified Gross Lease.

Traditional Definitions of Rent:

A. Net Lease: Tenant Pays Real Estate Taxes
B. Net-Net Lease: Tenant Pays Real Estate Taxes and Insurance Premiums
C. Triple Net Lease: Tenant Pays Real Estate Taxes Insurance Premiums and Repairs
D. Modified Gross: What ever the lease says it is.

No matter which terms are stated in the lease, it’s the details that make the difference. Important questions to ask: Are the total pass-through costs such as Taxes and Insurance paid by the tenant? Does the tenant only pay an increase over a Base Amount?

Commercial leases are often confusing and unclear.  Often, the most confusing and complex provisions are about pass-through costs. Having your attorney review and negotiate your lease is a prudent investment to avoid costly surprises down the line.

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