A lease that calls for a certain amount of rent and the landlord pays all the expenses is called?

• A. Net lease
• B. Percentage lease
• C. Ground lease
• D. Gross lease

Answer: (D)

Understanding who pays operating costs in a lease is the key idea here. In a gross lease, a single rent amount covers the use of the space plus most or all operating expenses, so the landlord pays property taxes, insurance, maintenance, and often utilities, while the tenant pays only the stated rent. This makes the rent amount predictable for the tenant. If the tenant were responsible for some of those expenses, you’d be looking at a net lease. Ground leases involve leasing land, sometimes with a building later transferred or built, and a percentage lease bases rent on sales. So the arrangement described—rent plus the landlord paying all expenses—fits a gross lease.