What does a gross lease agreement cost? You may ask this question if you are exploring different types of commercial lease agreements for your business. Let’s explore this question and review general information about gross lease agreements and other commercial leases.
How Much Does a Gross Lease Agreement Cost?
A gross lease agreement is one commercial lease agreement a tenant can enter with a landlord. Under this lease agreement, the tenant is only responsible for paying a flat monthly rental fee.
They are not obligated to pay extra for taxes, insurance, or maintenance. However, depending on the landlord, utilities may also be included in the flat monthly rate.
The cost of rent in a gross lease agreement will typically be higher than usual to account for all the added expenses. While some may see this as a negative, it can benefit the tenant because it is easier to budget with one set expense rather than fluctuating monthly numbers.
Many property owners who use a gross lease agreement choose to hire real estate lawyers to draft the contract. This ensures that the lease agreement contains all necessary terms, protects both parties, and is legally binding.
Tenants who are faced with signing a commercial lease agreement often like to have their own lawyer review the contract. Contracts are generally written to favor the drafting party, so a tenant needs to have a lawyer on their side to ensure the agreement is fair.
Based on ContractsCounsel’s marketplace data, the average cost of a gross lease agreement is $612.63 across all states.
Types of Gross Lease Agreements
There are two main gross lease agreements types, and each includes different expenses.
- Modified Gross Lease: A modified gross lease is a combination of a gross lease and a net lease, so the tenant will be responsible for paying extra for specific utilities. This lease can be adjusted to fit the needs of the tenant and landlord. For example, the tenant may be responsible for a proportionate share of utilities and maintenance.
- Full-Service Lease: A full-service lease is the most straightforward gross lease agreement. The tenant is only responsible for the rent, and the landlord is responsible for all other expenses associated with the property. This lease generally has more expensive rental rates because all expenses are included in the monthly fee.
What is Included in a Gross Lease Agreement?
The terms in a gross lease agreement will vary based on the property type, the type of gross lease being used, and the needs of the property owner and the tenant. Lease agreements are usually negotiable but should include the following basic information:
- Parties: The parties to the contract are the landlord and the tenant. These can be individuals or business entities.
- Property Address: The address of the space that is being leased must be included.
- Property Description: The property description includes square footage and any areas included in the lease, like parking.
- Property Use: The use clause dictates how a tenant can use the property. It will include information about the tenant’s business and manner of operation.
- Lease Term: The duration of the lease, including starting and end dates and usually a renewal option.
- Rent Amount: The monthly rent should be recorded. The agreement should also include information about rent increases.
- Security Deposit: Many lease agreements require a security deposit to begin using the property. This section should also describe how the security deposit is returned to the tenant.
- Signatures: To be legally binding, the agreement needs to be signed by both parties, and many states will also require a notary certification.
Depending on the type of gross lease agreement, the contract may need to include additional terms like whether the tenant is responsible for any other expenses. Again, a knowledgeable real estate attorney will know what terms and conditions your gross lease agreement should include.
Gross Lease Agreement Projects
Gross Lease Agreement Drafting
Gross lease agreements must be drafted correctly to protect the landlord and the tenant from liability and potential lawsuits.
It is always recommended that a landlord hire an experienced attorney to draft their lease agreement. A lawyer will ensure that the agreement contains all necessary terms, articles, and conditions to bind and protect the property owner legally.
Before beginning the draft for a gross lease agreement, a lawyer will meet with the property owner to go over the specifics of the property and what the landlord would like included in the lease agreement.
Gross Lease Agreement Review
Commercial lease agreements are often long-term agreements of at least one year. Therefore, when a tenant signs a gross lease agreement, they are making a commitment that could have a lasting impact on their business.
It is important that a tenant fully understand the lease terms and that the lease is fair. Therefore, before signing a gross lease agreement, a tenant should consult with a lawyer to review the draft.
A lawyer will review the agreement in the tenant’s best interests. They will ensure the tenant understands all the terms and that the agreement is fair and legally binding.
Gross Lease Agreement Drafting Cost
When a property owner hires a lawyer to draft a gross lease agreement, they will be charged for the lawyer’s time and services. This can include:
- An initial consultation
- Drafting time
- Revisions
- Follow-up meetings
ContractsCounsel’s marketplace data shows the average gross lease agreement drafting costs are $685.00 across all states.
Gross Lease Agreement Review Cost
If a tenant hires a lawyer to review their gross lease agreement, the tenant will be responsible for their own legal fees. Legal fees will include consultations, the time the lawyer takes to review the lease agreement, and any necessary revisions.
ContractsCounsel’s marketplace data shows the average cost to review a gross lease agreement is $507.00 across all states.
How Do Lawyers Charge for Gross Lease Agreements?
Hourly Rates for Gross Lease Agreements
An hourly rate fee structure is a popular way for attorneys to bill their clients. In this scenario, the lawyer has a set hourly rate, and they will charge their client the number of hours they spent on their client's task, like drafting a gross lease agreement.
This fee structure allows a lawyer to be compensated for all time they spend on a specific case. Bills can be sent periodically for more prolonged cases or as just one final bill when the project is completed.
ContractsCounsel’s marketplace data shows that the average hourly rate for a commercial real estate lawyer ranges from $200 - $350 per hour.
Flat Fee Rates for Gross Lease Agreements
Some attorneys will use a flat fee rate rather than hourly billing for a drafting project like a gross lease agreement. Before beginning the project, the attorney will quote the client a one-time fee to draft the lease. If the client agrees, they will pay upfront.
Depending on the attorney, a flat fee may include or exclude other services along with drafting a consulting agreement. Clients should ask the attorney whether the flat fee rate consists of a consultation meeting, communications, and any necessary revisions.
ContractsCounsel’s marketplace data shows the average flat fee rate for a gross lease agreement is $612.63.
Get Help with a Gross Lease Agreement
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