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 New Mexico (NM), 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 and landlords negotiating which expenses are covered by the tenant and how these costs are calculated and apportioned. The lease agreement should clearly outline the responsibilities of each party, including the base rent amount, the expenses the tenant is responsible for, and the method for calculating the tenant's share of those expenses. It is important for both parties to review the terms carefully and possibly consult with an attorney to ensure the lease terms are understood and to protect their respective interests.