USA Law and Practice Contributed by: Richard L. Rosen, Leonard S. Salis and Dennison Marzocco, Rosen Karol Salis PLLC
ment is “personal” to the easement holder and does not “run with the land” upon the property’s transfer. 6.2 Types of Commercial Leases Commercial leases generally include absolute leases, gross leases, net leases, percentage leases, variable leases and ground leases. Abso - lute leases are long-term agreements where ten - ants pay all operational and maintenance costs related to the property, including structural maintenance and repairs. Gross leases, which are typically described as either “full-service” or “modified” , are primarily used for office or retail space. In “full-service” gross lease, the tenant receives one invoice covering the base rent, utilities, insurance and tenant’s share of taxes and common area maintenance costs, and the landlord pays all such amounts to third parties, as necessary. “modified” gross lease typically occupies the middle ground between a gross lease and “triple net” lease, where the tenant pays base rent, utilities and a portion of operat - ing costs. “Triple net” leases are long-term agreements where tenants pay most operational and mainte - nance expenses for commercial buildings, ware - houses or industrial spaces. Landlords are typi - cally responsible for external structural repairs. In “double net” lease, the tenant typically pays the landlord the base rent together with the tenant’s pro rata share of real estate taxes and insurance, and the landlord is responsible for paying the costs of maintaining the building’s common areas and making structural repairs. In “single net” lease or “net lease” , the tenant pays the landlord the base rent and the tenant’s pro rata share of real estate taxes, and the land -
lord is responsible for paying the various other building expenses and making structural repairs. In “percentage” lease, which may be used for a retail business, the tenant pays a lower base rent plus a percentage of gross revenues earned at the demised premises. In “variable lease” , the rent structure changes over time. For example, in an index lease, the base rent amount is tied to a particular “index” such as the Consumer Price Index, whereas in “graduated lease” , the base rent increases according to a predetermined schedule. In a ground lease (see 6.1 Types of Arrange- ments Allowing the Use of Real Estate for a Limited Period of Time ), a tenant is permitted to develop a parcel of real property during the lease period, after which the land and all improve - ments are turned over to the property owner. 6.3 Regulation of Rents or Lease Terms Rents and lease terms in commercial leases in the USA are freely negotiated without regulation, unlike some residential leases, which may be subject to state or local regulation (such as “rent control” or “rent stabilisation” in New York City). During the COVID-19 pandemic, federal and state governments implemented eviction and foreclosure moratoria to protect tenants. COVID- 19-related government regulations varied widely by jurisdiction (states) and between residential and commercial tenants; however, most such regulations have expired as the pandemic sub - sided, although some court dockets relating to landlord-tenant disputes remain backlogged. 6.4 Typical Terms of a Lease As commercial leases in the USA may be 80 pages or even longer, it is difficult to summa -
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