A commercial landlord is reviewing lease types for a new office building. All of the following are accurate descriptions of commercial lease types EXCEPT.
Correct Answer
C) A percentage lease requires the tenant to pay a percentage of the building's appraised value as rent each year
A percentage lease requires the tenant to pay a percentage of the tenant's gross sales revenue, not a percentage of the building's appraised value. The appraised value of the building is irrelevant to percentage lease calculations.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A leasehold estate grants the right to possess and use property for a defined period of time, without conferring ownership.
A life estate is a freehold estate that grants ownership rights for the duration of someone's life.
Real property is immovable land and anything permanently attached to it, while personal property (also called chattels) is movable.
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Previous Question
A percentage lease has a base rent of $60,000 per year and a percentage rent rate of 6 percent. The natural breakpoint is the sales volume at which percentage rent begins. What is the natural breakpoint for this lease?
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A tenant holds a ground lease and uses the leasehold interest as collateral for a construction loan to build on the site. What is this type of financing called?