The cons of this are the variables you could be on the hook for. If the HVAC unit goes out, you’re responsible for it. You could also be exposed to a property tax hike as well.
ABSOLUTE TRIPLE NET LEASE
This less common option is much more binding than a normal triple net lease. The tenant is responsible for anything at all associated with the property in this type of lease. They are solely responsible for the building. It’s not common and because of this, many tenants might as well just 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 this type of lease is a compromise in the middle of both of them. There is 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
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