New York State Real Estate Salesperson Licensing Exam

What type of property usually involves a gross lease?

1. Retail spaces

2. Single-family homes

3. Multi-tenant office buildings

4. Vacant land

The correct answer is: Multi-tenant office buildings

A gross lease typically applies to multi-tenant office buildings, where the landlord covers most, if not all, of the operating expenses associated with the property. In a gross lease agreement, the tenant pays a single fixed rental amount, while the landlord handles expenses such as property taxes, insurance, and maintenance costs. This arrangement simplifies budgeting for tenants since they do not need to account for fluctuating operating expenses each month. In contrast, other property types like retail spaces often use modified gross or triple net leases, which may require tenants to bear some of the operating costs. Single-family homes typically involve a lease format where the tenant pays rent to the landlord, but the specifics can vary widely and are not usually categorized as gross leases. Vacant land usually does not involve a lease arrangement that would imply operating expenses like those found in multi-tenant buildings. Thus, multi-tenant office buildings are the most common scenario where a gross lease is applied, making that answer the most appropriate in this context.