lease. The tenant’s rent covers every operating expense for the building. The landlord is responsible for paying every expense that relates to the property. This includes janitorial service, utilities, any maintenance, property taxes, insurance, and anything else associated with the property. Most tenants prefer the landlord being fully responsible for the handling and maintaining of the property. The base rent is usually higher in this situation, in order to help the landlord pay off these fees. This is favorable to tenants because they avoid getting involved in the day to day operations of the property. They have less on their plate. The rent is fixed and that’s all they need to worry about. This type of rent is popular among more leases than just those for office space for that reason. During a cold winter, the electric bill may go up but the rent won’t and the tenant won’t be responsible for any increase. These types of leases are some of the best for tenants because of what I’ve said so far, but there are no hidden fees. So it’s easier for companies to budget out their monthly and annual expenses when the rent is fixed like this. Landlords can try to include some cost flexibility in some cases for these types of leases. The “escalation clauses” would be needed in case of increases for insurance and property taxes. Sometimes language can be included in a lease that increases rent due to variable costs. During a cold winter with a higher electric bill, the next month the rent could be higher to cover that. Of course, these provisions take away the positive aspect of a completely fixed rent. However, in these scenarios there usually isn’t that much of a price difference. The tenant is still responsible for their own insurance for their items.
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