What Is a Lease?

Legally binding documents are not just written for the sake of formality. They are essential in various business processes, especially when it involves more than two parties. In the absence of a written contract or agreement, there is no proof that a negotiation exists. Thus, making it easier for either party to break the rules. One example of a legally binding contract is a lease. This document sets forth the legal obligations of the lessee and lessor about leasing a property. Proprietors write a lease whenever they rent out a building, vehicle, property, land, and more, to another entity for a specific time frame.

Types of Lease

Although leases have common features, their structure varies in nature—depending on the preference of the proprietor. For this reason, both the lessee and lessor should have a clear understanding of the different types of leases before binding themselves into an agreement. This will help both parties determine the expenses they will incur during a specific period. Here is an outline of the common types of commercial leases for your reference:

Absolute Net Lease: In an absolute net lease, it is the tenant’s responsibility to pay for structural maintenance, roof, repairs, taxes, and insurance. With this type of lease, the tenant does not only cover minor repairs but also larger property maintenance costs.

Triple Net Lease: A triple net lease means that tenants should pay the operating costs on top of the base rental amount. These operating expenses include repairs, maintenance, and real estate taxes. Unlike the absolute net lease, tenants don’t have to pay for the roof and structural repairs in a triple net lease.

Gross Lease: With this type of arrangement, tenants only pay for the flat monthly amount while the landlords cover other costs such as operating expenses and property charges.

Percentage Lease: The provision of a percentage lease is tenants pay for the base amount of rent plus a percentage of the revenue they earn while running a business in the property. Usually, mall outlets and other business establishments execute this type of lease.

Draft a Lease Correctly

As a lessor, you should see to it that you have the right documents for your business, and this includes the lease. Writing this legal document won’t be that mentally exhausting if you have the right resources. Worry no more! Creating your own standard lease won’t be a burden with the help of these professionally written sample documents you can download anytime in any of your digital devices. So before you start writing a lease, make sure to first secure a copy of one of these samples we have compiled just for you!

 

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