What do the different lease rate terms mean—i.e. gross lease, triple nets, percentage lease?
Following are some of the common lease terms that refer specifically to rental rates. Gross Lease: A lease where the tenant pays a flat monthly amount and the landlord pays for all operating costs for the building. In some cases, the tenant pays for its electricity, heat, and air conditioning. This type of lease often contains an escalation clause that allows the landlord to increase the rent annually to offset increased expenses. Net Lease: A lease type whereby the tenant is responsible for the payment of its proportionate share of all recoverable expenses of the building. This would mean the tenant is required to pay some or all of the taxes for the property in addition to the base rent. Net-Net Lease: These leases go one step further than the Net Lease. Besides base rent and taxes, the tenant pays for insurance on the space they occupy. Net-Net-Net Lease: Triple-net leases effectively pass on all the costs of operating the building, including repairs and maintenance to the renter. P
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