Texas Real Estate Sales Agent ExamContractsEasy
A tenant's lease agreement specifies that they are responsible for paying a fixed monthly rent, property taxes, and hazard insurance premiums. The landlord is responsible for structural repairs and common area maintenance. What type of lease is this?
- AGross Lease
- BNet Lease
- CPercentage Lease
- DGround Lease
Show answer & explanationAnswer & explanation
Correct answer: B. Net Lease
A net lease requires the tenant to pay rent plus some or all of the property expenses, such as taxes, insurance, and maintenance. This scenario describes a single net lease where the tenant pays taxes and insurance in addition to rent.
Why the other options are wrong
- A. A gross lease requires the tenant to pay only a fixed rent, with the landlord covering all property expenses.
- C. A percentage lease involves rent based on a percentage of the tenant's gross sales, typically in retail.
- D. A ground lease involves leasing only the land, with the tenant typically owning or building the improvements.
Net Lease
A lease agreement in which the tenant pays a fixed rent plus some or all of the property's operating expenses, such as property taxes, insurance, and maintenance.
- Can be single net (taxes), double net (taxes + insurance), or triple net (taxes + insurance + maintenance).
- Common in commercial real estate.
- Shifts some operating cost burden from landlord to tenant.
Memory trick: G.N.P. - Gross, Net, Percentage describe how expenses are paid.