Leases

Question 1

States that the landlord is responsible for paying expenses (i.e. property taxes, insurance, and maintenance costs). Apartment complexes typically use this type of lease.

Answer 1

Gross lease

Question 2

This states that the tenant is responsible for paying expenses (i.e. property taxes, insurance and maintenance costs).

Answer 2

Net lease

Question 3

States that the tenant will pay a percentage of gross sales as rent as well as a base rental amount. This lease is usually used in shopping centers.

Answer 3

Percentage lease

Question 4

A combination of a gross and net lease. The initial expenses are paid by the landlord, then each tenant pays a pro rate amount of the expenses that exceed that.

Answer 4

Office-building lease

Question 5

States changes that take place in rent (increase or decrease) over the lease’s term.

Answer 5

Graduated lease

Question 6

Used in cases when the owners does not want to sell or the tenant wants to use its funds on capital improvements. many times used for commercial development.

Answer 6

99 year lease

Question 7

Novation

Answer 7

Novation is when the original lease is substituted for a new lease. A sublet doesn’t count.