Janet wants to rent a heated garage for a flat rate of $100 per month. What type of lease is this?

• A. Ground lease
• B. Gross lease (fixed flat rent where landlord pays most/all operating expenses)
• C. Net lease
• D. Percentage lease

Answer: (B)

A gross lease is when the tenant pays a fixed rent and the landlord covers most or all of the operating expenses, such as maintenance, taxes, and insurance. In Janet’s case, she would pay a single flat amount of $100 per month for the heated garage, which implies the rent includes the cost of the space itself without the tenant handling additional operating costs. This all-inclusive, flat rent setup is characteristic of a gross lease. A net lease would have the tenant responsible for some or all operating expenses beyond rent, so it doesn’t fit. A percentage lease bases rent on sales, which isn’t described here. A ground lease involves leasing land for long-term improvement, not typically a garage rental.