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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Small Business Owners Commercial Leasing Tip #1: The Lease is more than just a contract between the Landlord and the Tenant.

This starts a series in which I will discuss topics that small businesses should be aware of when signing a commercial lease.

The Lease: The lease is both a Contract and a Leasehold, or interest in property. Simple contract analysis is not enough. The commercial tenant needs to be aware of traps that go along with a leasehold interest. Many of these issues will NOT be addressed in the lease proposed by the Landlord. It takes knowledge and experience to make sure you are protected against unknown or unforeseen risks.