The responsibility for real estate levies is typically determined by the terms of the lease agreement between the landlord (property owner) and the tenant occupying the space for business purposes. While the property owner is ultimately responsible for remitting these levies to the taxing authority, the lease can stipulate different arrangements. For example, a “gross lease” generally includes the property tax within the rent, whereas a “net lease” (often categorized as single, double, or triple net) can shift some or all of this burden to the tenant. A triple net lease, for instance, commonly requires the tenant to cover taxes, insurance, and maintenance expenses in addition to the base rent.
Understanding the allocation of this financial obligation is crucial for both landlords and tenants in commercial real estate transactions. Clear delineation of these responsibilities helps avoid disputes and ensures accurate financial planning. Historically, the evolution of different lease structures reflects changing market dynamics and the desire to allocate risks and responsibilities in a manner that benefits both parties. Net leases, for example, became increasingly popular as a way for landlords to mitigate financial risks associated with property ownership.
