Gross Lease Vs Net Lease
There are differences between gross lease and net lease, and it can be useful to understand these differences not only for a tenant, but also for a landlord. Knowing the differences can have an impact not just on the taxes of the tenant, but also of the landlord. |
Sponsored Links :
|
Both types of leases are used primarily for commercial buildings, and are usually made for long-term purposes. A gross lease is one where the tenant pays a gross amount to the landlord as rent. In addition, where ever applicable, the tenant will also pay sales tax. In lieu, the landlord is responsible for paying the maintenance costs, insurance costs of the property as well as the property taxes.
However, in a gross lease the tenant is usually responsible for paying electricity, telephone, water and sewer charges, but it depends on the way the lease has been worded. In addition, the landlord may also pass on the cost of common area charges to the tenant as way to reduce his part in paying for the maintenance of the building. Sometimes, it is quite possible that an expense stop clause is part of the lease agreement. As the name suggests, the tenant pays a gross amount to the landlord so that the landlord can pay for all the things the tenant is responsible for.
On the other hand, a net lease is where the tenant is solely responsible for paying all costs related to maintenance. In addition, he would also have to pay the stipulated amount for the rent. This means that besides the rental, the tenant is also duty-bound to pay for taxes on the leased property, building insurance as well as the common area costs. Usually the payment is in form of net amount and hence, its name.
More Articles :
|
