Question 84

A lease where tenant pays taxes, insurance, and maintenance is called a net lease.

A net lease is a type of lease agreement where the tenant is responsible for paying not only the rent but also additional expenses such as taxes, insurance, and maintenance costs associated with the property.

A) net lease

This option is correct as a net lease specifically requires the tenant to cover various costs in addition to the base rent, which typically includes taxes, insurance, and maintenance expenses.

B) gross lease

A gross lease is incorrect because, in this type of lease, the landlord is responsible for covering most or all of the property expenses, including taxes, insurance, and maintenance. The tenant pays a flat rental fee without additional charges.

C) ground lease

A ground lease is not the correct choice as it refers to a long-term lease involving land where the tenant may develop on the property but typically does not cover the operational expenses like taxes and insurance.

D) percentage lease

This option is incorrect because a percentage lease is commonly used in retail situations where the tenant pays a base rent plus a percentage of their sales revenue. This type of lease does not involve the tenant covering taxes, insurance, or maintenance.

Conclusion

The net lease is the definitive correct answer as it directly aligns with the definition of a lease where the tenant takes on additional financial responsibilities beyond the base rent. All other options fail to meet this criterion, either shifting the responsibility to the landlord or focusing on different leasing structures.