Illinois Real Estate Practice Exam

Under a net lease arrangement, what expense would a tenant typically be responsible for paying?

1. Property taxes

2. Homeowner's insurance

3. Maintenance

4. HOA fees

The correct answer is: Maintenance

In a net lease arrangement, tenants typically have a responsibility for specific expenses associated with the property, which often include maintenance costs. This is part of the overarching structure of a net lease, where the tenant absorbs certain operational costs in addition to paying the base rent. The specifics can vary based on the type of net lease (single net, double net, or triple net), but maintenance is often a consistent obligation included in what tenants must manage. In contrast, expenses like property taxes, homeowner's insurance, and HOA fees may not always fall to the tenant depending on the lease terms. For instance, while certain net leases may place property taxes and insurance responsibilities onto the tenant, it's more standardized that maintenance is a tenant responsibility under these lease agreements. This structure helps the landlord maintain a steady income while ensuring that the property remains in good condition through tenant-led maintenance.