Illinois Real Estate Practice Exam

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Prepare for the Illinois Real Estate Test. Practice with flashcards and multiple choice questions, each question has hints and explanations. Get ready for your exam!

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What kind of lease is linked to the lessee's gross annual sales?

Net Lease
Triple Net Lease
Percentage Lease
Variable Lease

The correct answer is: Percentage Lease

The correct choice is indeed the percentage lease. This type of lease is specifically tied to the lessee's gross annual sales. In a percentage lease, the tenant pays a base rent that may be lower than a traditional lease and additionally pays a percentage of their gross sales revenue. This arrangement is commonly used in retail and commercial spaces because it aligns the interests of both the landlord and tenant; the landlord benefits from the tenant's success while providing the tenant with lower initial costs. In contrast, a net lease typically involves the tenant paying a base rent along with certain additional expenses like property taxes or maintenance costs, but it is not directly connected to sales figures. A triple net lease goes further by having the tenant cover all property expenses, including insurance, which again does not relate to gross sales. Variable leases involve fluctuating rates based on different factors, but they are not specifically structured around sales performance as a percentage lease is.