FREE CRECI Lease Agreement Structures Questions and Answers

Question 1

Which lease agreement structure typically requires the tenant to pay a base rent plus a percentage of their gross sales, commonly found in retail properties?

Accepted Answer

Percentage Lease

Answer

Gross Lease

Answer

Net Lease

Answer

Absolute Net Lease

Question 2

A commercial landlord wants to minimize their operating expense risk by having the tenant responsible for property taxes, insurance, and common area maintenance (CAM). Which lease structure would best achieve this goal?

Accepted Answer

Triple Net (NNN) Lease

Answer

Modified Gross Lease

Answer

Full Service Lease

Answer

Flat Gross Lease

Question 3

In a scenario where a tenant signs a lease where they pay a fixed rental amount, and the landlord is responsible for all operating expenses, including property taxes, insurance, and maintenance, what type of lease structure is this?

Accepted Answer

Gross Lease (or Full Service Lease)

Answer

Net Lease

Answer

Percentage Lease

Answer

Ground Lease

Question 4

Which of the following is a key characteristic of a Ground Lease?

Accepted Answer

The tenant leases the land and constructs their own building, often for a very long term.

Answer

The tenant is typically responsible only for a percentage of sales.

Answer

The landlord pays all operating expenses, including utilities.

Answer

The rent adjusts annually based on the Consumer Price Index (CPI) only.

Question 5

A lease agreement where the tenant pays a base rent, and the landlord covers some, but not all, operating expenses (e.g., the landlord pays for structural repairs, while the tenant pays for utilities and property taxes) is best described as a:

Accepted Answer

Modified Gross Lease

Answer

Absolute Net Lease

Answer

Gross Lease

Answer

Percentage Lease

Question 6

Which lease structure places the most significant financial burden and risk on the tenant, requiring them to pay base rent plus all operating expenses, including structural repairs and sometimes even capital expenditures?

Accepted Answer

Absolute Net Lease

Answer

Single Net (N) Lease

Answer

Gross Lease

Answer

Modified Gross Lease