Classifications of Leases (continued)
---Method of Rent Payments---
Leases are also classified by method of rent payments, such as gross, net, and percentage leases.
(A) Gross Lease : A gross lease is also called a flat, fixed, or straight lease. The tenant pays an agreed-upon sum as rent and the landlord pays any other expenses such as taxes, maintenance, or insurance.
(B) Net Lease : In a net lease, the tenant pays an agreed-upon sum as rent, plus certain agreed upon expenses per month (i.e, taxes,insurance,and repairs). The benefit of a net lease to the lessor is that it created a fixed income.
(c) Percentage Lease: A percentage lease is a lease in which the tenant pays a percentage of gross monthly reciepts in addition to a base rent. Usually the higher the gross reciepts, the lower the percentage rate. An example of a percentage lease is a commerical parking lot. It would typically pay the highest percentage in a percentage lease.
Eddy Martinez
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