A retail tenant signs a lease that requires paying a base rent of $3,000 per month plus a percentage of gross sales exceeding $500,000 annually. What type of lease is this?
Correct Answer
B) A percentage lease that combines base rent with a share of the tenant's sales revenue
A percentage lease requires the tenant to pay a base rent plus a percentage of gross sales above a specified breakpoint. This type of lease is common in retail shopping centers where the landlord benefits from the tenant's commercial success.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Community property is a system where property acquired during a marriage is owned equally by both spouses.
A freehold estate represents ownership of real property with an indefinite duration.
Joint tenancy is a form of co-ownership in which two or more persons hold equal, undivided interests in property with the right of survivorship. When one joint tenant dies, their interest automatically passes to the surviving joint tenants.
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A retail tenant has a percentage lease with a base rent of $2,500 per month and pays 5 percent of annual gross sales over a $400,000 breakpoint. The tenant's annual gross sales are $600,000. What is the tenant's total annual rent?