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Leasing & Property Management term

Gross Lease

A lease in which the tenant pays a fixed rent and the landlord covers operating expenses like taxes and insurance.

Why Gross Lease matters on the exam

This term belongs to Leasing & Property Management. The questions below are real items from Freehold's bank that use it - each one cites its source.

Exam questions using Gross Lease

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In a gross lease, who typically pays the property taxes, insurance, and maintenance?

  1. The tenant pays all operating expenses
  2. Expenses are split evenly between the parties
  3. The property manager pays from the security deposit
  4. The landlord pays the operating expenses
Show answer & explanation

The landlord pays the operating expenses — Under a gross lease the tenant pays a fixed rent and the landlord covers operating expenses like taxes, insurance, and maintenance. Residential apartment leases are commonly structured this way.

Source: PSI National Real Estate Exam Content Outline §8 Leasing & Property Management

A lease that specifies scheduled rent increases at set future dates over the lease term is called a:

  1. Percentage lease on retail space
  2. Graduated (step-up) lease
  3. Gross lease
  4. Subordinated ground lease
Show answer & explanation

Graduated (step-up) lease — A graduated or step-up lease builds in predetermined rent increases at specified intervals, letting both parties plan for rising costs without renegotiating the lease every time.

Source: PSI National Real Estate Exam Content Outline §8 Leasing & Property Management

Which lease type is most commonly used for multi-tenant office buildings where the landlord manages shared building services for all tenants?

  1. Triple net lease with tenant-paid expenses
  2. Ground lease on the underlying land
  3. Gross or modified gross lease
  4. Percentage lease tied to gross sales
Show answer & explanation

Gross or modified gross lease — Multi-tenant office buildings commonly use gross or modified gross leases so the landlord can centrally manage and pay for shared services like common-area maintenance, then bill one rent figure.

Source: PSI National Real Estate Exam Content Outline §8 Leasing & Property Management

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