Gross lease
A commercial lease where the tenant pays one flat rent and the landlord covers taxes, insurance, and maintenance out of it. Simple for tenants. Landlord takes the risk of rising expenses.
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Part 1 of 4
Why a seller cares
Under a gross lease the tenant pays one rent and the landlord pays the building's costs from it. A buyer of a small commercial property reads the lease type first, because it decides who is exposed to rising taxes and insurance.
Part 2 of 4
A simple example
Your storefront tenant pays $2,500 a month flat. Taxes and insurance rose $200 a month this year, and under the gross lease that came out of your side.
| The lease type | Who carries the building's costs |
|---|---|
| Gross lease | The landlord, out of the rent |
| Modified gross | Split, as the lease says |
| Triple net | The tenant, on top of base rent |
A gross lease is simple for the tenant and risky for the owner, and buyers price the risk.
Part 3 of 4
What people get wrong
That $2,500 a month is $30,000 a year of income. Under a gross lease the building's costs come out first.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
In your Room, this word explains itself where it appears.
Your Room defines gross lease in the step you meet it in, beside the document or the date it belongs to. Free to set up, with an agent or on your own.
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