In a net lease agreement, what does the tenant pay based on?

In a net lease agreement, the tenant’s payment structure includes base rent plus some or all operating expenses associated with the property. This arrangement is significant because it shifts additional financial responsibilities to the tenant beyond just the rent payment.

Typically, in a net lease, expenses may include property taxes, insurance, and maintenance costs, which can vary based on the property's management and operational needs. This structure allows property owners to ensure that all costs are covered while providing tenants with a clear understanding of their total financial obligations.

Choosing a flat monthly fee may not fully capture the variable costs associated with property management. Similarly, calculations related to the property’s appraisal or gross sales do not directly pertain to the operating expenses incurred throughout the lease term. Therefore, the definition of a net lease correctly indicates that it incorporates both base rent and additional expenses, giving rise to the correct answer.