PSI Oklahoma Real Estate Practice Test

A low rental rate with operating expenses paid by the tenant is an example of which type of lease?

1. Gross lease

2. Net lease

3. Percentage lease

4. Month-to-month lease

The correct answer is: Net lease

In real estate, a net lease is characterized by a low rental rate where the tenant also assumes responsibility for the operating expenses associated with the property. This arrangement typically means that the tenant pays not only the base rent but also expenses such as property taxes, insurance, and maintenance costs. This type of lease is beneficial for landlords as it helps minimize their financial responsibilities, while it can also provide tenants with lower initial rental costs. A gross lease, in contrast, includes both rent and operating expenses in one consolidated amount, generally resulting in a higher stated rent. A percentage lease often involves a retail scenario where rent is calculated as a percentage of the tenant's sales, which is different from the operating expense structure presented in the question. A month-to-month lease refers to the rental agreement duration, allowing either party to terminate the lease with minimal notice, and does not directly relate to the financial arrangements concerning operating expenses.