Leasing a commercial office space requires much-needed research. Not only because of the involvement of hefty investment during the initial stages but also due to the existence of various types of commercial lease agreement in the financial market that needs and understanding of legal terminologies.
Most of the commercial leases are term-based which means that that agreement between the seller and the tenant expires in a particular time frame. However, with a change in the commercial realty market, the leasing types have also changed as per the needs and demand. Take a look at different types of commercial lease that that exists in India:
Popularly known as a full-service lease, under this a landlord pay all the expenses occurred on commercial property from the rent received from the tenant. These expenses include tax, insurance, maintenance, etc. Here, the landlord is completely responsible for all the wear and tear in the building and the tenant just has to pay the rent, which is also considered as an added advantage. Such type of lease is most common in a multi-tenant commercial building.
This is just the opposite of gross lease. Under this, a tenant apart from paying the rent also has to pay for other added expenses on the building like maintenance, taxes, management, utility payment, etc. A net lease is differentiated into three parts:
- Single Lease
In a single net lease, a tenant has to pay rent as well as also has to pay for a portion of property tax, utilities, cleaning and maintenance services. Rest all other charges are borne by the landlord.
- Double Lease
Under this, apart from the base rent, a tenant has to pay a certain part of property tax, insurance, and utility charges. On the other hand, structural repairs and common area maintenance is taken care of by the landlord.
- Triple Net Lease
Known for its landlord-friendliness, a triple net lease refers to the type where the tenant has to bear all the additional expenses besides the main rent. It is also known as Net Net Net Lease (NNN). So, a tenant must read all the terms and conditions before signing such lease and ask for any negotiations with the landlord beforehand.
Modified Gross Lease
Following the lines of a gross lease, a modified one refers to an agreement wherein there exists a scope for a compromise in base rental between the landlord and the tenant. However, expenses such as janitorial services and electricity are not included in the agreement. Because of various modifications, this type of lease is quite popular among the commercial tenant community.
However, for some signing a net lease is more profitable. So, it’s always advisable to sign a lease agreement based on the business need and demands. You can also take help from the financial experts and consultants to understand the lease agreement in a better way.