By: Will Van Vactor
Commercial leases come in several different forms. This blog post briefly describes some of the more common lease forms used by landlords and tenants.
A triple net lease (“NNN”) is a lease in which the tenant pays base rent plus its proportionate share of all expenses, including maintenance, taxes, and insurance. In some cases, the tenant may only pay its proportionate share of some of the expenses. In that case, the lease may be a net lease or double net lease. This lease form can be used in most commercial lease settings (i.e., office, industrial, retail).
A gross lease is one in which the landlord charges a single base rent. To determine the base rent, the landlord will estimate its operating expenses and taxes. A gross lease gives the tenant certainty about the total amount it will be pay as rent.
A percentage lease is sometimes used in the retail setting. With a percentage lease, the tenant will pay a base rent, plus a percentage of its sales. A “breakpoint” is often negotiated so that a tenant does not have to pay the landlord a percentage of sales if sales fall below a certain point.
Commercial leases are binding contracts. They can be complicated and have long-term financial consequences. A real estate attorney can help prepare, negotiate, and review a commercial lease. To avoid the risk of signing a bad lease, any party looking to sign a commercial lease should retain an attorney.
The information on this blog is for general informational purposes only. This information is not intended to create, and receipt or viewing does not constitute an attorney-client relationship. Nothing on this site should be taken as legal advice for any individual case or situation. This blog should not be used as a substitute for competent legal advice from an attorney licensed to practice law in your state.