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 Massachusetts, a modified gross lease is a type of commercial lease agreement where the tenant pays a fixed base rent plus a share of certain operating expenses for the property. The specific expenses covered by the tenant can vary from lease to lease but typically include property taxes, insurance, utilities, maintenance and repairs, and common area maintenance (CAM) costs. The allocation and calculation of the tenant's share of these expenses are negotiated and outlined in the lease agreement. It is important for tenants to carefully review and understand the terms of a modified gross lease, as the way expenses are passed through and calculated can significantly affect the overall cost of leasing the property. Tenants may wish to consult with an attorney to ensure they fully understand their obligations under a modified gross lease and to negotiate terms that are favorable to their situation.