Question

In what type of lease do the rent payments start at a fixed amount but increase as the lease term matures?

A) Fixed Lease
B) Variable Lease
C) Graduated Lease
D) Indexed Lease

Answer 1

In a Graduated Lease, the rent payments start at a fixed amount but increase as the lease term matures.

Step-by-step explanation:

In a Graduated Lease, the rent payments start at a fixed amount but increase as the lease term matures. This type of lease allows the landlord to adjust the rent based on specific increments or percentages over time. For example, the rent might increase by a certain percentage annually or every few years.

Let's say you have a graduated lease for a commercial space, and the initial rent is $1,000 per month. The lease agreement states that the rent will increase by 5% every year. After the first year, the rent would be $1,050 per month, and it would continue to increase by 5% each subsequent year.

Therefore, the correct answer is Graduated Lease (C).