Modified gross lease
A commercial lease that splits property costs between landlord and tenant. Common in office buildings. Terms vary widely, so what's included has to be read line by line.
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Part 1 of 4
Why a seller cares
A modified gross lease splits the building's costs between landlord and tenant, and the split is whatever the lease says. A buyer of a small commercial property reads the split before the rent.
Part 2 of 4
A simple example
Your office tenant pays $3,000 base and their share of utilities and janitorial; you pay taxes and insurance. The lease says exactly which.
| The cost | Who pays under this lease |
|---|---|
| Utilities and janitorial | The tenant, pro rata |
| Taxes and insurance | The landlord |
| Roof and structure | The landlord, in nearly every version |
Modified gross means read the list. The list is the lease's real rent.
Part 3 of 4
What people get wrong
That modified gross is a standard split. There is no standard; every lease draws the line differently.
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
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