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 Pennsylvania, a modified gross lease is a type of commercial lease agreement where the tenant pays a set 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 commonly include property taxes, insurance, utilities, maintenance and repairs, and common area maintenance (CAM) costs. The tenant's proportionate share of these expenses is typically determined by the percentage of the total property or building that the tenant occupies. It's important for tenants to carefully review and negotiate the terms of a modified gross lease to understand which expenses they are responsible for and how these expenses are calculated. Both parties should also be aware of any relevant state statutes and local ordinances that may affect the terms of the lease. As with any legal agreement, it is advisable for both landlords and tenants to consult with an attorney to ensure that the lease terms are clear, fair, and legally compliant.