Florida Real Estate Broker ExaminationReal Estate Brokerage ManagementEasy
A Florida real estate broker is managing a commercial property. The lease agreement specifies that the tenant is responsible for paying a proportionate share of the property's real estate taxes, insurance, and common area maintenance (CAM) costs. This type of lease is commonly referred to as a:
- AGross lease
- BPercentage lease
- CGround lease
- DNet lease
Show answer & explanationAnswer & explanation
Correct answer: D. Net lease
A net lease (or triple net lease if it includes all three: taxes, insurance, and CAM) is a commercial lease where the tenant pays a base rent plus a portion or all of the property's operating expenses.
Why the other options are wrong
- A. A gross lease typically means the landlord pays all property expenses.
- B. A percentage lease involves rent based on a percentage of the tenant's gross sales.
- C. A ground lease involves leasing raw land for development, with the tenant owning improvements.
Net Lease
A commercial lease agreement where the tenant pays a base rent amount plus a portion or all of the property's operating expenses, such as real estate taxes, insurance, and common area maintenance (CAM).
- Tenant pays base rent + expenses.
- Expenses often include taxes, insurance, CAM.
- Common in commercial real estate.
Memory trick: Net leases make the tenant 'net' the expenses, not just the rent.