Texas Real Estate Sales Agent ExamContractsEasy
A tenant is leasing a retail space under an agreement where the rent is calculated as a base amount plus a percentage of the tenant's gross sales above a certain threshold. What type of lease is this?
- AIndex Lease
- BPercentage Lease
- CGross Lease
- DNet Lease
Show answer & explanationAnswer & explanation
Correct answer: B. Percentage Lease
A Percentage Lease is a type of commercial lease where the rent is a base amount plus a percentage of the tenant's gross sales. This structure is common in retail properties.
Why the other options are wrong
- A. An Index Lease ties rent adjustments to an economic index, not sales performance.
- C. A Gross Lease involves a fixed rent where the landlord pays all operating expenses.
- D. A Net Lease requires the tenant to pay fixed rent plus a share of operating expenses.
Percentage Lease
A commercial lease in which the tenant pays a base rent plus a percentage of their gross sales above a certain breakpoint.
- Commonly used for retail businesses.
- Aligns landlord's income with tenant's business success.
- Often includes a 'breakpoint' before the percentage applies.
Memory trick: Percentages Profit from Popular Places.