5 types of commercial leases

Beginning a business or moving to a new location can be a great move for your future. However, signing a commercial lease is different from moving into an apartment.

Before you settle on a property for your business, you should first understand what different types of commercial leases are out there.

Single Net Lease

A single net lease, also known as a net lease, keeps you as the tenant only responsible for rent, utilities and property tax. Your landlord will pay for maintenance, repairs and insurance.

Double Net Lease

The double net lease is also called a net-net. You will pay for the rent, property tax, insurance, utilities and janitors. With this lease, you are not responsible for paying the common area maintenance fees (CAMs). Your landlord will be responsible for covering maintenance in the lobby, elevators, stairways and public restrooms.

Triple Net Lease

In a triple net lease, the tenants cover rent, utilities, janitors, property tax, insurance and CAMs. Typically, your landlord handles all structural building repairs.

With this lease, you should look for an “absolute net” clause. This holds you responsible for paying rent no matter what happens to the building.

Modified Gross Lease

The modified gross lease is also referred to as a full-service gross lease or modified net lease. This version takes structural repairs, property taxes, insurance, CAMs and utilities, and splits the expenses between the tenant and landlord. You will be typically be charged one bill that covers these expenses. This is the most common type of lease for buildings that have multiple tenants, like an office complex.

Percentage lease

If you are looking at space in a shopping center, you may have a percentage lease. Tenants are charged base rent and a percentage of their sales.

Signing the wrong lease for your situation can be detrimental to your business. When you are considering a lease for your business, it’s always wise to discuss your options with a legal professional.