What type of commercial lease requires the tenant to pay base rent plus their proportionate share of property taxes, insurance, and common area maintenance?
Correct Answer
B) Net lease
A net lease requires tenants to pay base rent plus their share of operating expenses including property taxes, insurance, and common area maintenance costs. This shifts operating cost responsibility from landlord to tenant.
Why This Is the Correct Answer
A net lease requires tenants to pay base rent plus their proportionate share of operating expenses including property taxes, insurance, and common area maintenance costs. This lease structure shifts the responsibility for these variable operating costs from the landlord to the tenant, making the tenant responsible for both occupancy costs and their share of property operations. Net leases are common in commercial real estate as they provide landlords with more predictable income while transferring operational cost risks to tenants.
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