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A modified gross lease is a type of real estate rental agreement where the tenant pays base rent at the leases inception, but it takes on a proportional share of some of the other costs associated with the property as well, such as property taxes, utilities, insurance, and maintenance.
Stated simply, the concept of gross up is that, when calculating a tenants share of operating expenses for an office building that is less than fully occupied, the landlord first increases - or grosses up - those operating expenses that vary with occupancy (e.g., utilities, janitorial service, etc.) to the amount
In a modified gross or full-service lease, the landlord has you covered and will pay the operating expenses incurred for the first calendar yearor base yearof the lease. Then, your business starts paying its pro-rata share the next year.
Commercial Agreement - Key takeaways Types: Common examples include sale of goods agreements, service agreements, lease agreements, distribution agreements, employment agreements, non-disclosure agreements, joint venture agreements, and franchise agreements.
A modified gross lease provides another beneficial feature for landlords: an expense stop. This means that landlords will cover expenses up to a certain amount.
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Gross lease refers to commercial leases where the tenant pays a set amount periodically for renting the property. This is in contrast with net leases whose prices vary depending on expenses and factors such as the costs of maintenance, taxes, insurance, or market changes.

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