In a net lease, the landlord is responsible for paying the lease commission; the lessee is not compelled to make this payment.
A commercial real estate landlord will pay a real estate broker a fee known as a lease commission, or LC, in exchange for introducing a tenant who successfully completes a lease with the landlord. Typically, it comes out of the tenant's annual rent as a percentage.
As part of an overall cost-of-business line item in the accounts, LLCs are sometimes grouped alongside tenant inducements. The lessor typically makes two payments to cover the commission on a business lease. At the time of the lease signing, the tenant must pay the first half of the commission; the second half is payable when the tenant begins using the space.
The standard method for calculating lease commissions is to use a dollar amount per square foot per year or a percentage of the total base rent that the tenant will pay over the course of the lease.
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