Property Management
What is 'gross lease' versus 'modified gross lease' in Delaware commercial leasing?
AGross leases are for retail; modified gross leases are for office space
BA gross lease has the landlord paying all operating expenses; a modified gross lease allocates certain expenses to the tenant (e.g., the tenant pays electricity directly) while the landlord covers others — a hybrid between gross and net leases✓ Correct
CModified gross leases are standard for all Delaware commercial properties
DBoth terms are legally the same under Delaware contract law
Explanation
In a pure gross lease, the landlord pays all expenses and the tenant pays only base rent. In a modified gross lease (also called a gross lease with stops or partial net), certain expenses are allocated to the tenant beyond base rent — often utilities, janitorial, or expenses above a base year amount. Modified gross leases are very common in Delaware office market transactions, balancing simplicity for tenants with expense-sharing for landlords.
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