Leases

Net lease

A lease in which the tenant pays operating expenses on top of rent

Which expenses depends on how many "nets" the lease carries — commonly taxes, insurance and maintenance, singly or in combination. Commercial and industrial space is normally let this way, and the headline rent means little until you know what sits outside it.

How many nets a lease carries and what each one covers are matters of the individual document, not of a national rule. The label is a shorthand, not a definition.

How the exam asks about it

The examinable point is that the rent figure alone does not tell you the tenant’s cost. Leases are compared on total outlay, not on quoted rent.

Quick check: Net lease

One question. Pick an answer to see the explanation.

Which term is being defined: “A lease in which the tenant pays operating expenses on top of rent”?

Related terms

Gross leaseGround leasePercentage leaseLeasehold estate

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