A modified gross lease is a commercial lease in which the tenant pays a fixed base rent on a monthly or annual basis, but also agrees to pay a proportional amount of the operating expenses for the property, such as:

• taxes

• property insurance

• utilities

• maintenance and repairs (including structures such as the roof), systems (heating, ventilation, and air conditioning and electrical)

• common area maintenance (CAM) such as maintenance of the parking lot, landscaping, maintenance staff, security staff, and maintenance of elevators and escalators.

There are many variations of modified gross leases, with different expenses reimbursed by the tenant to the landlord, and different methods of calculating the tenant’s proportionate share of the expenses.

In Alabama, a modified gross lease is a type of commercial lease agreement where the tenant pays a set base rent plus a share of the property's operating expenses. These expenses can include property taxes, insurance, utilities, maintenance and repairs of structures and systems, and common area maintenance (CAM) costs. The specific terms of a modified gross lease can vary widely, with tenants sometimes responsible for different expenses and the method of calculating their share of these costs differing from one lease to another. The exact obligations of the tenant are typically detailed in the lease agreement, and it is crucial for both landlords and tenants to clearly understand and negotiate these terms. Alabama does not have specific statutes that govern the structure of modified gross leases, so the terms are largely dictated by the lease agreement itself. As with any contract, it is advisable for tenants to consult with an attorney to ensure that they fully understand their financial responsibilities under a modified gross lease.