What is a characteristic of a modified gross lease?

A modified gross lease is a type of commercial lease that combines elements of both gross leases and net leases. In this arrangement, the landlord typically covers some of the operating expenses, while the tenant is responsible for a portion of those expenses, such as utilities, property taxes, and maintenance costs. This structure allows for a more balanced sharing of expenses between the landlord and tenant.

This characteristic of a modified gross lease is important because it provides clarity on financial responsibilities and can help both parties manage their expenses more effectively. By specifying that the tenant pays a share of operating expenses, it sets clear expectations, which can help avoid disputes later on.

In contrast, in a pure gross lease, the landlord would be responsible for most, if not all, operating expenses, and in a net lease, the tenant would take on more financial responsibilities. Therefore, the definition of a modified gross lease as a hybrid structure that involves shared expenses aligns with the reasoning behind why it's crucial for both landlords and tenants to understand their financial obligations when entering into such agreements.