What is a net lease?

A net lease is characterized by the tenant agreeing to pay base rent along with additional operating expenses related to the property. This typically includes costs such as property taxes, insurance, and maintenance fees. By including these expenses in addition to the base rent, the lease arrangement provides the landlord with a stable income while allowing the tenant to have more control over the property's operational costs. This type of lease is common in commercial real estate contexts, where the landlord transfers some of the financial responsibilities to the tenant, reflecting a more aligned interest in the management of the property.

The other choices illustrate different lease structures that do not fit the definition of a net lease. For instance, a lease where the tenant pays only rent does not involve any additional expenses, which contradicts the premise of a net lease. Similarly, if a lease allows the landlord to cover all expenses, it would be considered a gross lease, not a net lease. Lastly, a lease with no fixed payment terms lacks the structure necessary to constitute any type of lease agreement, highlighting an absence of defined financial obligations.