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Lease Terms and Types of Lease Agreements

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July 29, 2017

Coming back to the article we recently wrote about Triple Net Lease Structures, here is a quick overview of some other, less common lease structures and an explanation of the Term:

Gross Lease: The tenant pays a set sum or “gross” amount for rent and the landlord pays all real estate expenses. Sometimes these leases will also include utilities.

NNN (Triple Net/Net Net Net Lease): A net lease under which the lessee assumes all expenses of operating a property, including both fixed and variable expenses and any common area maintenance that might apply. However, the landlord is responsible for structural repairs. Referred to as a triple net lease or NNN. MOST COMMON IN ALBERTA.

Absolute NNN Lease: No landlord responsibilities. Tenant is responsible for taxes, insurance and all maintenance (including roof & structure) exactly as if the tenant was the owner of the building.

Percentage Lease: The lease rate paid by the tenant is based on a percentage of the monthly or annual gross sales made on the premises. This type of lease is used for retail leases. There is usually a minimum monthly rent set by the landlord.

Gross leases and modified gross leases associated with commercial real estate involve greater landlord responsibilities.

Trust in your real estate professionals at KLRT Commercial about the details of the properties that you are looking to lease. Make sure that when you are comparing properties, you understand the total cost to you with respect to the lease agreement. This way you will be using your total cost of occupancy for comparison of different properties.