what is a modified gross lease?

In Leasing Property - Asked by John M. - Dec 18, 2014
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Answer(s)

Michael V.
Broker/Agent
Keyport, NJ

A type of real estate rental agreement where the tenant pays base rent at the lease's inception but in subsequent years pays the base plus a proportional share of some of the other costs associated with the property, such as property taxes, utilities, insurance and maintenance.

Dec 18, 2014
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Jackie F.
Broker/Agent
Tampa, FL

A type of real estate rental agreement where the tenant pays base rent at the lease's inception but in subsequent years pays the base plus a proportional share of some of the other costs associated with the property, such as property taxes, utilities, insurance and maintenance. For example, under a modified gross lease, a property's tenants might be required to pay their proportional share of an office tower's total heating expense.

Dec 23, 2014
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Glen W.
Lender/Mortgage Broker
Atlanta, GA

Good question. The details of the modified gross need to be clearly stated in the lease, as both posters stated below it is a base rent +, this increment could be heat, water, taxes, etc... Modified gross leases are frequently seen in older properties with some sort of shared amenity. There is no correct answer for what is or is not included since it is property specific

Dec 29, 2014
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Rainy B.
Property/Asset Manager
La Jolla, CA

A gross lease is where the landlord levies the tenant a fix rent and the landlord pays the property tax, maintenance and other fees as defined in the lease. Contrast that to a Triple Net (NNN) lease, where the tenant is responsible for the base rent AND a portion of the property tax, insurance, maintenance, utilities and other fees defined in the lease proportional to the space occupied in the building by the tenant. Typically gross leases are used in residential rentals and triple net leases are used in commercial leases.

Jan 8, 2015
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Karla J.
Broker/Agent
Los Angeles, CA

A modified gross lease requires the tenant to pay a portion of the expenses such as utilities and typically excludes taxes and insurance.

Jan 16, 2015
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