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 Maryland, 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 they typically include property taxes, insurance, utilities, maintenance and repairs, and common area maintenance (CAM) costs. The tenant's proportionate share of these expenses is usually determined based on the square footage they occupy relative to the total leasable space. Maryland does not have a specific statute that governs the terms of a modified gross lease; instead, these leases are subject to general contract law principles and the negotiated terms between the landlord and tenant. It is important for both parties to clearly outline the responsibilities and methods of calculating expenses in the lease agreement to avoid future disputes. Tenants considering a modified gross lease may benefit from consulting with an attorney to ensure that the lease terms are clear and fair.