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What are my commercial lease options?

| Sep 21, 2020 | commercial real estate |

Residential property leases generally require tenants to pay a fixed rent cost to the landlord and then assume responsibility for their own utility costs. Some residential leases may include one or more utility costs in the rent and those terms would be clearly spelled out in the contract.

Commercial leases may offer a greater range of options as more costs may come into play with factors such as parking lots for employees or customers and interior or exterior areas shared by multiple tenants.

Net lease options

As explained by CrowdStreet, a basic net lease functions similarly to a standard residential lease in which the landlord receives only rental payments from the tenant. Other costs such as property taxes, insurance, utilities, maintenance and repairs may be paid by the tenant with the lease contract outlining the portion of taxes and insurance to be paid by the tenant.

Multiple net lease options exist that assign different portions of liability to the tenant and to the landlord so the parties may develop an agreement that meets their needs.

Gross lease options

On the other end of the spectrum, a basic gross lease provides one fixed cost to the tenant regardless of any changes in taxes, repairs, utilities or other factors. The landlord must assume the responsibility of meeting the changing cost needs. As with a net lease, a gross lease may be structured to adjust the responsibility for costs of individual items.

This information is not intended to provide legal advice but is instead meant to give people and businesses in New York an overview to the range of terms and structures that may be incorporated into a commercial property lease agreement.