Definition: A Percentage Lease typically requires a tenant to pay "Base Rent" and then on top of that amount, the tenant also pays a percentage based on monthly sales volumes. Percentage leases are commonly executed in retail mall outlets and other commercial retail leases.
Percentage leases should not take a percentage of all sales made, but should include a percentage paid to the landlord (lessor) only when a tenant has made a certain amount in any given month. For example, a percentage lease might require a tenant to pay 5% of all sales that exceed more than $25,000 in any given month.
Also see, "Base Rent" and "Average Percentage Rents Charged in Commercial Leases."
Related Terms:
Also Known As: Percent Lease; Percentage Leasing; Retail Lease; Participation Lease
