What is a main difference between gross and net lease structures?

The distinction between gross and net lease structures primarily revolves around how property expenses are allocated between landlords and tenants. In a gross lease, the rent amount encompasses all property expenses—this means that utilities, property taxes, maintenance, and insurance are all included in the overall rent payment made by the tenant. Therefore, tenants pay a single amount each month without needing to account separately for these additional costs.

This structure is appealing for tenants who prefer predictable budgeting, as they do not have to worry about fluctuating expenses throughout the lease period. By covering all expenses in the rent, landlords typically adjust the rental rate to reflect the total costs associated with maintaining the property. Thus, option C accurately captures the essence of a gross lease.

In contrast to a gross lease, net leases can vary, but they often require tenants to take on responsibility for some of the property expenses. This can include property taxes, insurance, and maintenance costs, which are either calculated as a separate charge or adjusted as needed throughout the lease term. Therefore, while understanding gross leases is simple in terms of all-inclusive pricing, net leases introduce complexity with variable costs based on usage or market conditions.