In a net lease, the lessee pays rent plus a share or all of the property's operating expenses.

• A. Gross Lease
• B. Net Lease
• C. Percentage Lease
• D. Graduated Stepped Lease

Answer: (B)

In a net lease, the tenant takes on the ongoing operating costs of the property in addition to paying rent. This means the tenant covers expenses such as property taxes, insurance, and maintenance, either in part or in full, depending on the specific net lease form. The word “net” signals that these costs are net of the base rent being charged by the landlord. Variations exist: some net leases require the tenant to pay only taxes (single-net), taxes and insurance (double-net), or taxes, insurance, and most or all maintenance (triple-net). This shifts cost responsibilities from the landlord to the tenant.

This contrasts with a gross lease, where the tenant pays a single rent amount and the landlord covers most or all operating expenses. A percentage lease involves base rent plus a portion of sales, and a graduated stepped lease focuses on rent increases over time. The key distinction is who pays the operating costs, which is why this option describes a net lease.