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  • Writer's pictureColin Dubel

Different Lease Structures & How they Affect the Tenant vs. the Landlord

There are several types of lease structures, each with its advantages and disadvantages to both tenants and landlords. Here are some of the most common lease structures:

  • Gross Lease: In a gross lease, the tenant pays a fixed monthly rent that includes all expenses, such as utilities, property taxes, insurance, and maintenance costs. This type of lease is convenient for tenants as they don't have to worry about paying separate bills, but landlords usually charge a higher rent to cover all expenses.

Advantages for tenants: Simple and predictable rent payments, no additional expenses.

Advantages for landlords: Lower administrative and accounting costs, higher income.

  • Net Lease: In a net lease, the tenant pays a base rent, plus additional expenses such as property taxes, insurance, and maintenance costs. There are three types of net leases: single net lease, double net lease, and triple net lease. In a single net lease, the tenant pays rent plus property taxes, while in a double net lease, the tenant pays rent plus property taxes and insurance. In a triple net lease, the tenant pays rent plus property taxes, insurance, and maintenance costs.

Advantages for tenants: Lower base rent, the ability to control expenses, more control over the property.

Advantages for landlords: Lower expenses, stable income, more time for other investments.


  • Modified Gross Lease: In a modified gross lease, the tenant pays a base rent plus some expenses, such as property taxes and insurance, but not all expenses. The landlord pays for maintenance costs.


Advantages for tenants: Some control over expenses, predictable rent payments.

Advantages for landlords: Lower administrative and accounting costs, stable income.


  • Percentage Lease: In a percentage lease, the tenant pays a base rent plus a percentage of their gross sales. This type of lease is typically used in retail and commercial properties, where the landlord wants to share in the tenant's profits.


Advantages for tenants: Lower base rent, the ability to pay rent based on performance.

Advantages for landlords: Higher income potential, the ability to share in tenant's success.


Overall, the lease structure that works best for a tenant or landlord depends on their individual needs and preferences. Landlords should carefully consider their expenses and desired level of involvement in property maintenance when choosing a lease structure. Tenants should consider their budget, business needs, and ability to control expenses when choosing a lease structure.


If you have any questions about this article or would like to discuss a scenario of your own with our team, please feel free to contact Colin Dubel at colin@harborwestcommercial.com or 949-735-6415.

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