Navigating the Indian Commercial Real Estate Market: Types of Leases Unveiled!

A commercial lease in India is a legally binding agreement between a landlord and a tenant for the rental of a commercial property. It outlines the terms and conditions under which the tenant can occupy and use the premises for business purposes. Commercial leases in India are governed by the Indian Contract Act, 1872, and specific state-level laws.

Here are the different types of commercial leases commonly used in India:

  1. Gross Lease: In a gross lease, the tenant pays a fixed amount of rent, and the landlord is responsible for covering all operating expenses, including property taxes, insurance, and maintenance costs.
  2. Net Lease: In a net lease, the tenant pays a base rent along with some or all of the property’s operating expenses. There are different types of net leases: a. Single Net Lease (N Lease): The tenant pays the base rent plus property taxes. b. Double Net Lease (NN Lease): The tenant pays the base rent plus property taxes and insurance. c. Triple Net Lease (NNN Lease): The tenant pays the base rent plus property taxes, insurance, and maintenance costs. This type of lease places the highest financial responsibility on the tenant.
  3. Fully Serviced Lease: Also known as a serviced office lease, this type of lease is common in business centers and co-working spaces. The rent includes a range of services such as furnishings, utilities, maintenance, and shared facilities.
  4. Percentage Lease: In a percentage lease, the tenant pays a base rent along with a percentage of their gross sales or revenue. This type of lease is often used in retail properties, where the landlord shares in the tenant’s success.
  5. Build-to-Suit Lease: In a build-to-suit lease, the landlord constructs a custom-built property according to the tenant’s specifications. The lease terms are typically long, allowing the tenant to occupy a purpose-built space.

It’s important to note that lease structures and terminology may vary depending on the specific terms negotiated between the parties involved. It’s advisable to consult with a legal professional or real estate expert to ensure that the lease agreement meets your specific needs and complies with applicable laws.

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.


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