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The term "percentage rent" refers to rent paid as a percent of space leased. True or...

The term "percentage rent" refers to rent paid as a percent of space leased.

True or false?

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Answer #1

Ans : False

Percentage Rent is additional rent to be paid over and above the Base or Minimum Rent. Such kind of rent is charged from large commercial or retail tenants such as shopping centres. It is based upon a percentage of the tenant’s gross sales.

The Basic or Minimum rent is calculated on the basis of per square feet of area leased whereas the percentage rent is paid after the agreed break even point of gross sales is met.

First, the tenant needs to pay a minimum rent as per the lease. Then, when the gross sales exceed the specified break even point, tenant is liable to pay a certain percent on the additional sales as additional rent or percentage rent.

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