PSI New Jersey Real Estate State Practice Exam

What type of lease includes a monthly fixed rent payment with all operating expenses covered?

1. Gross Lease

2. Net Lease

3. Percentage Lease

4. Ground Lease

The correct answer is: Gross Lease

A gross lease is a type of lease where the tenant pays a fixed monthly rent, and the landlord covers all operating expenses associated with the property. This typically includes costs such as property taxes, insurance, and maintenance. Because tenants do not need to worry about fluctuating costs for these expenses, they find it simpler to budget for their occupancy. In contrast, a net lease requires the tenant to pay not only rent but also some or all of the operating expenses, which can lead to variable monthly costs that tenants must manage. A percentage lease often ties the rent to the tenant's business performance, requiring them to pay a portion of their sales in addition to base rent. A ground lease is generally focused on the leasing of land rather than a building, with different structures of payment and responsibilities. Each type of lease serves specific purposes in the real estate market, while a gross lease provides a straightforward and predictable cost structure for tenants.