A gross lease—also referred to as a full service lease or gross rent or a gross rent lease—is a lease with a fixed monthly or annual rental fee that includes all rent and costs of operating the property, such as utilities, maintenance, taxes, and insurance. In this way, it is similar to a typical residential lease.
A variation of a gross rent lease is a “gross lease with stops”—meaning the tenant will contribute additional amounts if the landlord’s operating costs increase above a certain level. The level at which the tenant is required to contribute additional amounts to the landlord’s operating costs is known as the stop level, as that is where the landlord’s obligation to pay all of the costs (using the fixed rent payments) stops.
In Texas, a gross lease is a type of commercial lease agreement where the tenant pays a fixed amount that covers rent and all or most of the property's operating expenses, including utilities, maintenance, taxes, and insurance. This arrangement simplifies budgeting for tenants since they can anticipate their monthly costs without worrying about variable expenses. A 'gross lease with stops' is a variation where the tenant agrees to pay additional amounts if the operating costs exceed a predetermined threshold, known as the 'stop level.' This means that while the landlord covers all operating costs up to the stop level, any costs beyond that are the tenant's responsibility. The specific terms of a gross lease, including the stop level and what expenses are covered, are subject to negotiation between the landlord and tenant and should be clearly outlined in the lease agreement. It's important for both parties to review these terms carefully and possibly consult with an attorney to ensure their interests are protected and the lease complies with Texas law.
