Modified Gross Lease

Modified Gross Lease

A modified gross Lease is a type of commercial Lease agreement where the tenant pays a base rent amount plus a portion of the property Operating Expenses. Unlike a gross Lease where the landlord covers all expenses, or a Lease/">Net Lease where the tenant covers most expenses, a modified gross Lease typically divides these costs between the landlord and tenant.

Common expenses that may be included in a modified gross Lease are Property Taxes, insurance, and maintenance costs. The specific expenses covered can vary depending on the terms agreed upon in the Lease.

Examples

• In a modified gross Lease, a tenant might pay a base rent of $2,000 per month, plus a Share of utilities and property tax, while the landlord covers insurance and maintenance.
• Another scenario could involve a tenant paying a fixed rent of $1,500 per month, with the landlord and tenant splitting the costs of janitorial services and repairs.

Cases

Modified gross Leases are common in office buildings where tenants expect to Share some operational responsibilities while keeping base rent predictable. They offer flexibility for both landlords and tenants by allowing negotiation of what expenses each party will cover.