Florida Real Estate Broker ExaminationProperty Management and LeasingEasy
A tenant has signed a one-year lease agreement for a commercial retail space, which includes a clause stating that the landlord is responsible for all structural repairs, property taxes, and building insurance. The tenant is only responsible for utilities and interior maintenance. What type of lease has been executed?
- AGross lease.
- BNet lease.
- CGround lease.
- DPercentage lease.
Show answer & explanationAnswer & explanation
Correct answer: A. Gross lease.
In a gross lease, the tenant pays a fixed rental amount, and the landlord is responsible for paying all or most of the property's operating expenses, such as structural repairs, property taxes, and insurance. The tenant typically only covers their own utilities and interior maintenance.
Why the other options are wrong
- B. A net lease shifts some or all operating expenses (taxes, insurance, CAM) to the tenant.
- C. A ground lease involves leasing only the land, not the building structure.
- D. A percentage lease involves rent based on the tenant's gross sales, typically in retail.
Gross Lease
A type of commercial lease where the tenant pays a fixed rent, and the landlord is responsible for most or all of the property's operating expenses.
- Tenant's expenses are predictable.
- Landlord assumes more risk for fluctuating operating costs.
- Common in multi-tenant office buildings.
Memory trick: Gross is simple, Net adds expense, Percent shares sales.