What type of lease involves a tenant paying rent based on gross sales received from operating on the leased property?

A percentage lease is a type of lease in which the tenant pays rent based on a percentage of their gross sales from operating on the leased property. This arrangement is commonly seen in retail and commercial properties, where landlords may want to align their interests with those of their tenants. By tying the rental payments to sales performance, landlords benefit when their tenants succeed.

In addition to the base rent, the lease typically includes a provision for a percentage of sales exceeding a certain threshold, making it a variable arrangement that can adjust with the tenant's business performance. This type of lease provides landlords with a revenue stream that can increase as the tenant's business does well, potentially leading to a mutually beneficial partnership between both parties. Other lease types, such as fixed leases, do not offer this flexibility and stability that comes with linking rent to a tenant's sales figures.