Florida Real Estate Sales Associate Examination Content OutlineReal Estate Investment and Business BrokerageMedium
A commercial real estate agent is working with a landlord who owns a retail space. The landlord wants a lease agreement where the tenant pays a fixed base rent plus a percentage of their gross sales above a certain threshold. What type of lease is the landlord seeking?
- APercentage Lease
- BGround Lease
- CGross Lease
- DNet Lease
Show answer & explanationAnswer & explanation
Correct answer: A. Percentage Lease
A percentage lease is commonly used in retail, where the tenant pays a base rent plus an additional percentage based on their gross sales volume. This allows the landlord to benefit from the tenant's success.
Why the other options are wrong
- B. A ground lease is where a tenant leases only the land and builds on it, typically for very long terms.
- C. A gross lease typically means the tenant pays a fixed rent, and the landlord covers all property expenses.
- D. A net lease requires the tenant to pay base rent plus some or all property expenses (taxes, insurance, maintenance).
Percentage Lease
A type of commercial lease agreement, common in retail, where the tenant pays a base rent plus an additional percentage of their gross sales above a specified minimum.
- Landlord benefits from the tenant's sales success.
- Often includes a 'breakpoint' where the percentage kicks in.
- Used to align landlord and tenant interests in retail performance.
Memory trick: Leases define who pays what, fixed or variable.