Under a triple net lease, the tenant typically pays:

Rent plus taxes, insurance and maintenance

Exam vocabulary · lease classified by how rent is calculated

What Is Percentage Lease in Real Estate?

Definition

A percentage lease is a lease in which rent is a minimum base amount plus a share of the tenant’s gross sales. Retail and shopping centre space is leased this way so the landlord shares in a successful store’s upside while the base rent guarantees a floor.

How the exam tests percentage lease

These mirror the phrasing you will see on test day. Answer them, then read the explanation whether or not you got it right.

Percentage Lease: exam questions1/3

Property management

A percentage lease charges base rent plus 4% of sales above a stated breakpoint. What information is needed to calculate the additional rent?

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Every percentage lease question, answered

Every question above with its correct answer and the reasoning behind it. Read the explanations for the ones you answered correctly too. A lucky guess and knowing the rule look identical on a score report. These are sample questions from our larger bank.

1. A percentage lease charges base rent plus 4% of sales above a stated breakpoint. What information is needed to calculate the additional rent?
- AOnly the tenant's profits after income taxes
- BThe defined sales amount and contractual breakpointcorrect
- COnly total sales without the contractual definition or breakpoint
- DOnly base rent multiplied by the property's market value
Why: Percentage rent depends on the agreement's sales definition and threshold. Base rent alone does not establish the entire payment.
Property management
2. Under a triple net lease, the tenant typically pays:
- ARent plus utilities
- BRent plus taxes, insurance and maintenancecorrect
- CA percentage of gross sales
- DRent only
Why: The three "nets" are property taxes, insurance and maintenance, all on top of base rent. A gross lease puts those on the landlord; a percentage lease keys rent to sales.
Property management
3. A shopping center tenant pays a minimum monthly rent plus six percent of gross sales above a stated breakpoint. This is a:
- AGround lease
- BGross lease
- CPercentage leasecorrect
- DIndex lease
Why: Rent tied to sales volume above a breakpoint, with a minimum base rent, is a percentage lease and is standard in retail centers. An index lease adjusts rent by a published economic measure instead of by sales.
Property management

Where percentage lease sits in the exam vocabulary

Percentage Lease is a lease classified by how rent is calculated, and so are gross lease and net lease. That matters more than it sounds: a multiple-choice item builds its wrong answers out of siblings like these, because they are the options that look plausible to someone who has learned the category but not the distinction. If percentage lease appears as the correct answer, expect to see gross lease and net lease on the same screen.

The exam most often tries to catch you by putting percentage lease next to gross lease and net lease. Each of those is a real concept sitting close enough to be tempting, and the question usually turns on the single feature that separates them rather than on the definition of either one. Read the contrast, not the term.

Related exam terms

Tested alongside

Often confused with

Percentage Lease belongs to the lease classified by how rent is calculated family of exam concepts. When it is solid, take the free real estate exam prep or browse the full real estate exam vocabulary.