In a net lease, the tenant is typically required to pay which cost?

• A. Property taxes
• B. Mortgage interest
• C. Insurance premiums
• D. Landscaping

Answer: (A)

In a net lease, the operating costs of the property are shifted from the landlord to the tenant. The most common cost the tenant is responsible for is property taxes. This arrangement helps keep the base rent lower while the tenant reimburses the taxes assessed on the property.

Mortgage interest is a financing cost tied to owning the property, not an operating expense, so it isn’t typically passed through in a net lease. Insurance premiums can be involved in other net-lease variants (such as double-net or triple-net) where the tenant may also cover insurance and maintenance, but in the basic net-lease concept the defining pass-through is property taxes. Landscaping or maintenance costs are generally covered under other operating expense categories and can vary by lease type.