What is the main function of a gross lease?

The main function of a gross lease is that all costs associated with the property are included in the base rent. This means that, in a gross lease scenario, the tenant pays a set amount for rent, and the landlord is responsible for covering additional expenses such as property taxes, insurance, and maintenance. This structure simplifies the tenant's financial obligations as they do not have to budget for these additional costs, which can vary significantly from month to month in other types of lease agreements.

Under this arrangement, tenants benefit from predictability in their monthly expenses, as they only need to focus on one consistent payment. This can be particularly appealing for businesses seeking to manage cash flow more effectively.

In contrast, other types of leases, like net leases, would require tenants to pay additional costs beyond the base rent, which can lead to unexpected financial burdens. Understanding this distinction is crucial for tenants and landlords when negotiating lease terms and budgeting for property-related costs.