Gross lease refers to commercial leases where the tenant pays a set amount periodically for renting the property. This is in contrast with net leases whose prices vary depending on expenses and factors such as the costs of maintenance, taxes, insurance, or market changes. In a gross lease, the landlord includes maintenance fees, taxes, and other expenses in their calculation of the rent. This may result in higher rent for the lessee, but it also reduces their liability for changing prices. A tenant and landlord may negotiate the specifics of what the rent includes, meaning that some will include expenses like utilities or lawn maintenance while others will not. Also, some gross leases may combine elements of both gross and net leases like providing that the tenant will pay a higher rent if the landlord incurs a certain level of expenses called the “stop level.”
[Last updated in January of 2022 by the Wex Definitions Team]