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A Primer on Different Types of Leases

There are many types of leases. Do you know which one you're getting yourself into?

While the majority of leases have standard provisons, there are additional things to look out for among the different types of leases.

The basic type of residential lease is the flat or fixed lease, where rent is fixed at a certain amount for a set period of time. This is the type of residential lease you'll typically see. It can be month-to-month or it can be fixed for a term of months.

If it's a month-to-month lease, then rent can be changed each month. That can be a huge disadvantage to the renter. On the other hand, there's the flexibility to move out with short notice. There's no worries about penalties for breaking the lease.

A fixed term lease is harder to break and may come with penalties for early termination. However, its harder for a landlord to change the rent during the term of this lease.

Sometimes, landlords choose to enter into cost-of-living leases, which are long term leases but provide the landlord with the ability to increase rent each year to adjust to the cost of living increases (i.e., inflation).

In commercial leases, there are a few variations as well. This is usually because a commercial landlord may provide more services to a tenant. As a result, the landlord's expenses to operate the property are often quite high, and some of that burden is shouldered by the tenants. These expenses oten include taxes and insurance.

In a net lease, the tenant pays the base monthly rent and some of the expenses as they are incurred by the landlord.

In a net-net lease, the tenant pays a base rent and his proportional share of the taxes and insurance premiums.

And in a net-net-net (triple-N) lease, the tenant pays the taxes, premiums, insurance, repairs in addition to the base rent.

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