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What costs are included in a commercial lease?

On Behalf of | Jan 25, 2024 | Real Estate |

With a residential lease, the tenant may just have to pay rent every month. In some cases, utilities are also included. But this isn’t a given, and many renters have to cover these costs themselves.

With commercial leases, however, rent and utilities are just the beginning. Depending on the type of lease being used, there could be many other costs involved. It’s important for commercial renters to understand exactly what these costs look like and what they are obligated to cover.

What type of lease is it?

If you are thinking of signing a commercial lease, the first question is just to ask what type of lease you’re dealing with. It could be a single-net lease, a double-net lease or a triple-net lease, for example.

With a single-net lease, you would be responsible for the property taxes, along with the rent and potentially the utilities, as noted above. With a double-net lease, you would also have to cover the cost of insurance on the property.

If you are using a triple-net lease, however, the obligations take another step. You would also have to cover real estate taxes and maintenance costs. You may also have to cover building insurance, not just insurance for the property itself.

Legal obligations

The way that a lease is structured has a big impact on the viability of that property for your business. Rent itself may be lower if you’re covering additional costs, like insurance, so it’s very important to look into the details, to understand your legal obligations and to know what steps to take if there’s ever a dispute.