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 North Carolina, a modified gross lease is a type of commercial lease agreement where the tenant pays a fixed base rent along with 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 significantly, with tenants and landlords negotiating which expenses the tenant is responsible for and how their proportionate share is calculated. The lease agreement should clearly outline the responsibilities of each party, including the base rent amount, the expenses included, the method of calculating the tenant's share, and the payment schedule. It's important for both landlords and tenants to review the terms of a modified gross lease carefully and possibly seek the advice of an attorney to ensure that the lease terms are understood and agreed upon by both parties.