What type of lease involves a tenant paying a base rent plus a percentage of sales?

A percentage lease is structured in such a way that the tenant agrees to pay a base rent amount along with a percentage of their sales revenue. This type of lease is commonly used in retail settings where a landlord benefits from the success of the tenant's business. By aligning the interests of both the landlord and tenant, it allows for flexibility in lease payments that can adapt to sales performance.

In contrast, a gross lease typically involves the tenant paying a fixed amount that covers all property expenses, such as maintenance and taxes, without any additional percentage of sales. A net lease, on the other hand, requires the tenant to pay a base rent plus additional costs such as utilities and property taxes, but does not include a percentage of sales. Finally, a residential lease is geared towards tenants renting living space and does not incorporate sales performance into its structure. Understanding these distinctions helps clarify why the percentage lease is uniquely suited for certain commercial leasing environments.