Common kind of commercial leases.
This is the simplest and the oldest and a lease agreement. It sets a fixed price for a fixed period of time. This simple agreement between the landlord and the business tenant is getting more and mow elusive to find.
Avoid the flat lease if it is for a very short period of time has a series of flat cases can cost you more in the long run than a long-term lease with escalation clauses.
Step lease attempts to cover the landlord’s expected increase in expenses by increasing the rent on an annual basis over the life of the lease agreement. The one problem with the step lease agreements is that they are based on estimates rather than actual cost. There is no way for either party to know in advance that the proposed increases are fair or equitable.
Like a step please agreement, the net lease increases the rent to cover the increase in landlord’s costs but do so at the time when the increase occurs rather than on an estimate. This kind of lease agreement is more equitable than a step lease but it is also less predictable.
Cost of Living Lease
Rather than tying the rent increase to a specific expense, this kind of lease agreement increases the rent of the basis of the rises in the cost of living. Your rent will go up with general inflation. By since your business product and services also likely to increase their price with inflation, it should effectively cover the increases in rent. For this reason the scanned for lease agreement can be very appealing and attractive.
This lease agreement allows the landlord to benefit from the success of your business. The rent is based on either a minimum amount or a base amount or percentage of businesses across revenue whichever is higher. Percentage amounts usually range from 3 to 12%. You will be required to furnish the periodic proof of your gross sales which means that you may have to allow the landlord to examine your financial books or sales tax records or provide a copy of the appropriate section of your income tax return. Person leases are common for renting retail space.