Commercial Modified-Gross Lease Agreement

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Updated May 26, 2021

A commercial modified-gross lease agreement is a rental contract that requires the tenant to pay a base rent amount and a portion of the property expenses. The property expenses consist of real estate taxes, insurance, and common area maintenance (CAM’s), utilities and services not included.

Gross Lease vs Modified-Gross Lease

In a gross lease the tenant only pays the base rent.

In a modified-gross lease the tenant pays the base rent and a portion of the property expenses.

Common Practices

It is common in modified-gross agreements that the tenant pays for the common area maintenance (CAM’s) while the landlord pays for the insurance and taxes on the property. Although, the parties can choose to apportion the property expenses as desired.