As a tenant, landlord, or property manager, you must understand the common leasing agreements. A lease is a legal and binding contract that provides terms and conditions for rental agreements for a specific property in real estate. It is a formal agreement between a tenant and a landlord. There are a few different types of leases that are good to know.
What are some common leasing agreements?
Not all lease agreements are equal. They have different structures, depending on the lessor’s preferences and the current trends in the real estate market. In some leases, the tenant is responsible for the property’s burden, while in others, the property owner carries the load. Here are the common leasing agreements.The kind of lease agreement you choose can affect your monthly rental rates. Learn the common leasing agreements you should know. Click To Tweet
- Absolute Net Lease
- Triple Net Lease
- Modified Gross Lease
- Full-Service Lease
1) Absolute Net Lease
In this type of lease, the tenant carries the burden of taxes, insurance, and maintenance practices. The absolute net lease is ideal for single-tenant systems built by a property owner. The property owner designs these properties to suit the tenants’ needs. The owner then hands the completed unit to the tenant for a particular period. However, the tenant pays lower rental rates monthly.
2) Triple Net Lease
This lease agreement comes with three operating expenses: maintenance, insurance, and property taxes. The tenant assumes all these expenses as rent excesses. Also, the agreement applies to single-tenant and multi-tenant rental units.
In single-tenant leases, the tenant oversees landscaping and exterior maintenance. But in multi-tenant leases, the property owner is responsible for the property’s appearance.
3) Modified Gross Lease
In this lease agreement, the entire burden is upon the property owner. The owner pays for the property taxes, insurance, and maintenance practices. Conversely, the tenant pays for utility, janitorial, and interior maintenance costs.
The building’s roof and other structures are also under the owner’s responsibility. This lease agreement is beneficial to the tenant because the owner assumes the associated risks. However, the monthly rate is high due to the tenancy costs taken by the owner.
4) Full-Service Lease
In this lease agreement, the property owner covers many of the building’s operating costs. However, there are a few exceptions, like data and telephone costs. Some of the expenses covered by the property owner include maintenance, insurance, taxes, utility, interior, and janitorial costs. For that reason, the monthly rental rate is slightly higher.
Bran Real Estate Services Property Management
It is important to know the different types of leases as either a property owner or a tenant. Need help deciding what type of lease to use for your property? Bran Real Estate Services can help you with all your property management needs. This includes lease agreements.
Contact us to learn more about lease agreements in real estate.