Modified Gross Lease

A modified gross lease is a lease agreement in which the tenant pays a base rent plus a share of the landlord's operating expenses. The base rent is typically fixed for the lease term, while the tenant's share of operating expenses is typically based on a percentage of the landlord's total operating expenses.

Modified gross leases are often used for retail space, as they allow the tenant to share in the costs of maintaining the property. This can be beneficial for the tenant, as it can help to keep their operating costs down. However, it is important to note that the tenant's share of operating expenses can vary significantly from year to year, depending on the landlord's actual operating expenses.

There are a few key things to consider when evaluating a modified gross lease. First, you need to understand the base rent and the tenant's share of operating expenses. Second, you need to understand how the landlord's operating expenses are calculated. Third, you need to understand how the lease term is structured.

If you are considering a modified gross lease, it is important to have an experienced real estate attorney review the lease agreement before you sign it. An attorney can help you to understand the terms of the lease and to negotiate any terms that you are not comfortable with.

Here are some of the advantages and disadvantages of modified gross leases:

* Advantages:
* Tenants can share in the costs of maintaining the property.
* Tenants may be able to negotiate lower base rents.
* Disadvantages:
* Tenants' share of operating expenses can vary significantly from year to year.
* Tenants may be responsible for unexpected expenses.
* Tenants may have less control over the property.