for anything at all associated with the property. They are solely responsible for the building. This kind of lease is not common. Many tenants might just as well buy the entire building if it’s free- standing. It’s a better investment. You own the building or space without buying it in this situation. If a disaster or something happens, it’s all on you. This lease has been referred to as the “hell or high water” lease.
MODIFIED GROSS LEASE
The full-service lease is tenant-friendly, the net leases are landlord-friendly, and of the modified-gross lease is a compromise between them. This lease has a fixed base rent and each side can negotiate which types of other fees are each party’s responsibility. Utilities and janitorial services are usually excluded and picked up by the tenant but it can be the other way around. Everything else is usually negotiable. Tenants often prefer this because of the flexibility in the eventual lease terms. Unlike net leases, the fees for taxes or insurance are fixed. If they increase, the tenant won’t pay more, but if they decrease the landlord gets those savings. Having no hidden or changing costs is a great benefit for the tenant and their long-term budgeting. You often see these leases being offered in multi-tenant buildings so the tenants don’t have to deal with the hassle of not getting the fair distribution for utility buildings and shared-area costs. One con of this is that landlords have been known to be lazier in these leasing agreements. So if the tenant works out a lease where they are responsible for maintenance, the landlord may be less motivated to get something fixed (or be cheap about it), as opposed to other types of leases. That’s because some landlords are motivated by spending less on the building to save themselves
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