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Different Kinds of Commercial Leases
Although in some respects commercial leases contain similar terms as residential leases, such as a monthly rental price, property description, and term of the tenancy, in other respects commercial leases are structured differently.
Not only do commercial leases leave more room for negotiation, but there are different types of commercial lease agreements that divide the parties’ responsibilities for payment of rent and expenses differently, and each one offers pros and cons depending on your business needs. An experienced Florida commercial real estate attorney can represent you in the negotiation of your commercial lease.
Gross Lease
Similar to many residential leases, under a gross lease, tenants pay a fixed rent. In exchange, landlords pay the property expenses, including insurance, utilities, maintenance, and taxes. These "full-service" leases, as they are often called, may contain "expense stop clauses" that cap landlord liability for expenses in order to prevent tenant abuse. Although these leases have a simple structure, they could end up costing tenants more if landlords bake expenses into the lease price, potentially making the lease more expensive for the tenant.
Net Lease
In a net lease, the tenant pays a portion of the commercial space’s operating expenses and the rent. There are different types of net leases, depending on how many of the three main operating expenses (property insurance, maintenance, and taxes) that the tenant pays. A single net lease covers only one type of operating expense, a double net lease covers two, and so on. Double and triple net leases are typically long-term rentals.
Percentage Lease
In a percentage lease, the tenant is responsible for paying a fixed rent as well as a percentage of the profits to the landlord, usually resulting in a lower rental price. The landlord also has the potential to earn more money if the tenant does well, and therefore has an incentive for the tenant to succeed.
Modified Gross Lease
Similar to a gross lease, the landlord pays for expenses in the modified gross lease, but only for a limited period of time. After a certain time (for example, a year), the tenant assumes payment for some costs. This gives the tenant an opportunity to get off the ground with lower expenses, which benefits the landlord by encouraging a stable and long-term tenant.
Contact a Fort Lauderdale, FL Commercial Real Estate Attorney
Unlike residential leases, commercial leases are more complex and offer many options for negotiating terms. The experienced Broward County, FL commercial real estate attorney at The Elliot Legal Group, P.A. helps clients draft commercial lease agreements that protect their rights while keeping in mind business concerns. Call our law firm at 754-332-2101 to speak to our attorney about the terms of your commercial lease.
