Maryland Home Improvement PSI Practice Exam

A gross lease can be best defined as one where the tenant pays, as a part of the rent, ___________?

1. All property changes excluding utilities.

2. No operating expenses of the leased space.

3. Outside maintenance and property taxes only.

4. All property expenses except the interest on the owner's mortgage.

The correct answer is: No operating expenses of the leased space.

A gross lease is characterized by the tenant paying a flat fee to the landlord, which covers not only the rent but also all operating expenses associated with the property. This means that the landlord is responsible for paying all the operating costs, such as property taxes, insurance, and maintenance expenses, thereby not passing those additional costs onto the tenant. Essentially, the tenant does not have any additional expenses beyond their agreed-upon rent amount. This structure offers tenants predictability in their budgeting, as they are not responsible for fluctuating operational costs. The other options include elements that misrepresent how a gross lease operates. For example, the idea of tenants covering some property changes or maintenance duties runs counter to the nature of a gross lease, where the landlord retains that responsibility.