Florida Broker Practice Exam

What type of lease allows the tenant to pay rent based on gross sales?

1. Fixed lease

2. Percentage lease

3. Ground lease

4. Variable lease

The correct answer is: Percentage lease

A percentage lease is structured to allow the tenant to pay rent that is based on a percentage of their gross sales, in addition to or instead of a fixed rent amount. This type of lease is commonly used in retail and commercial settings where the landlord seeks to make a profit aligned with the success of the tenant’s business. The rationale behind this arrangement is that it can benefit both parties: the tenant might pay less in rent during slower sales periods, and the landlord can potentially earn more when the tenant's sales increase. In contrast, a fixed lease requires the tenant to pay a predetermined, unchanging rent amount regardless of their sales performance. A ground lease pertains to leasing land only, allowing the tenant to build and maintain structures, but does not typically incorporate sales-based rent. A variable lease might adjust rent over time due to different factors but does not inherently link the payment to gross sales like a percentage lease does. This makes the percentage lease particularly unique and beneficial for specific types of commercial leasing agreements.