The New York Law Blog: NY Commercial Lease Basics: Different Types of Commercial Leases
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Thursday, July 7, 2016

NY Commercial Lease Basics: Different Types of Commercial Leases

NY Landlord-Tenant Law, NY Real Estate
When negotiating your commercial lease in New York, it is important that you know the types of leases that will be offered to your business.

There are different types of commercial leases and a number of alternate names and abbreviations that can be confusing. The basic structures mainly differ based on what the tenant is responsible for paying in addition to the base rent term each month:
  • In a Single Net Lease, or Net Lease, the tenant generally pays utilities and property tax in addition to base rent. The landlord usually pays for maintenance, repairs and insurance;

  • In a Double Net Lease, or Net-Net Lease, the tenant pays for utilities, property taxes and insurance premiums for the building in addition to the base rent. The landlord usually pays for maintenance and repairs.

  • In a Triple Net Lease, sometimes written up as a Net-Net-Net Lease, the tenant is generally responsible for all costs of the building in addition to the base rent. The landlord is only generally responsible for structural repairs. I have even seen this referred to as a "hell or high water lease" because tenants virtually step into the place of the landlord, including for liability to third party claims. 

  • In a Full Service Gross, or Modified Gross Lease (also referred to as a modified net lease): the landlord and tenant split structural repairs and operating expenses (property taxes, property insurance, common area maintenance (CAM), and utilities), and called that ‘base rent.’

There are advantages and draw-backs to each kind of lease. For example, Triple Net Leases tend to be more landlord-friendly because it transfers a lot of the landlord's responsibilities to the tenant, and the lease can also fluctuate from month to month and year to year as operating expenses increase or decrease, making the company's expense forecasting tricky and sometimes frustrating. On the other hand, tenants benefit from a Triple Net Lease because the tenant can finding cost savings in operating expenses and save on their own bottom line.

As you can see, there are many different commercial leases that each contain different and confusing terms. With any lease out there, New York businesses recognize that the devil’s in the details. Determining which lease suits your needs, your particular business and your finances is a serious matter.
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*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.