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What should you know about commercial lease types?

On Behalf of | Mar 22, 2021 | Real Estate Transactions |

Signing a commercial lease is much different than entering in to a residential lease. One thing that’s vastly different is that there are different types of commercial leases. While residential leases are based on a flat rate for rent, this isn’t the case for many commercial leases. It’s necessary to understand what expenses you’re responsible for before you sign the lease.

Net leases for commercial properties

There are three primary types of “net leases” for commercial properties. These include:

  • Single net lease: With this type of lease, the tenant is responsible for paying the landlord rent plus property tax for the space.
  • Double net lease: This lease requires the tenant to pay rent, property taxes, and building insurance.
  • Triple net lease: This is the most common net lease. It requires the tenant to pay rent, insurance, property taxes, utilities and maintenance costs.

There is also something called a bondable net lease. However, this is usually included in a triple net lease. It places a requirement on the tenant to pay rent in the event of a major structural issue with the building. These protect landlords from potential rent concessions during the rebuilding process.

It’s possible that commercial landlords may also use other types of lease structures, including those that require tenants to pay them a portion of their profits. Because there are so many variations, be sure to read the terms and understand them before you sign a commercial lease. Your attorney can review the lease to ensure that there isn’t anything amiss in it. This can help you protect your business.