Commercial Leases

Washington Commercial Leases ## Commercial vs. Residential Leases Commercial leases are negotiated contracts between sophisticated parties — businesses and commercial landlords. Unlike residential leases, commercial leases are NOT governed by RCW 59.18 (the Residential Landlord-Tenant Act). There is no implied warranty of habitability, no mandatory security deposit return timeline, no just cause eviction requirement, and far fewer consumer protections. The parties have much greater freedom to negotiate terms. For this reason, commercial tenants (and their brokers) must read every provision carefully — there are few statutory backstops. ## Three Main Commercial Lease Types ### 1. Gross Lease (Full Service Lease) The tenant pays a flat rent; the landlord pays all operating expenses: - Property taxes - Insurance - Maintenance and repairs - Utilities (in some gross leases) Tenant perspective: Predictable fixed cost; no surprise operating expense bills. Landlord perspective: Bears all expense risk; if taxes or maintenance costs rise, the landlord absorbs it. ### 2. Net Lease (and Variations) The tenant pays base rent PLUS some or all operating expenses. The key variations: | Type | Tenant Pays | |---|---| | Single Net (N) | Base rent + property taxes | | Double Net (NN) | Base rent + taxes + insurance | | Triple Net (NNN) | Base rent + taxes + insurance + maintenance/CAM charges | Triple net (NNN) is the most common structure for commercial retail and industrial properties. The tenant pays for nearly everything. Base rent is typically lower to compensate. Real-world exam trap: "Net" does not always mean the same thing — always identify whether it is N, NN, or NNN. Triple net = all three: taxes + insurance + CAM (common area maintenance).…