A percentage lease is a lease where rent payments are based on the leaseholder's sales or profits. A typical percentage lease will have a base rent, which is a minimum amount of rent that is always due each month.
In addition to the base rent, the leaseholder must also pay a percentage of the gross or net sales each month, as stipulated in the lease agreement, that were earned by the leaseholder during that month. The lease terms should state exactly what counts as a "sale" to be included in the calculation of what rent is due.
No, there is no maximum amount of rent that the landlord can collect under a percentage lease. As sales increase over time, the rent also increases over time. The only way to limit the maximum amount of rent that the landlord can collect under a percentage lease is to stipulate to a ceiling or upper limit rent amount in the lease.
Commercial leases are very complex agreements with every provision open for negotiation. A real estate attorney will be able to inform you of whether a percentage lease is best for your business needs and can protect your interests and rights when negotiating you
Last Modified: 06-26-2018 07:42 PM PDTLaw Library Disclaimer
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