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An overview of real estate lease options

On Behalf of | May 22, 2020 | Real Estate Law

There are many different types of rental agreements that commercial tenants and landlords in New York may agree to. For instance, an accountant or attorney may decide that a gross lease best meets his or her needs. A landlord is typically responsible for paying maintenance and other costs in such an arrangement, and a tenant will likely pay a higher base rent each month. It isn’t uncommon for landlords to pass on a portion of their costs to tenants when calculating a monthly rental rate.

Tenants who agree to a triple net lease are typically required to pay property taxes, insurance and maintenance costs. This may be an ideal arrangement for those who are in a new building that may not need any repairs. However, it might be more expensive for tenants renting older spaces that need significant upgrades.

Retail companies and other commercial tenants could choose to sign a modified net lease agreement or a percentage lease. A modified net lease agreement typically allows a tenant to pay just its base rental rate for a portion of the rental period. After that period expires, a tenant will pay the base rate plus a percentage of its sales. A percentage lease typically requires a tenant to pay a base rate plus a portion of its monthly sales for the entirety of the rental period.

In most cases, tenants and landlords have the leeway to create commercial real estate lease terms that meet their needs. Ideally, a company that is looking to rent commercial space will negotiate a lease with the assistance of an attorney. An attorney may help to ensure that a deal is flexible enough so that it can be renegotiated or terminated in the future if a tenant desires.