Property ManagementIntermediateDelaware Exam

What is 'gross lease' versus 'modified gross lease' in Delaware commercial leasing?

AGross leases are for retail; modified gross leases are for office space
BA gross lease has the landlord paying all operating expenses; a modified gross lease allocates certain expenses to the tenant (e.g., the tenant pays electricity directly) while the landlord covers others — a hybrid between gross and net leasesCorrect
CModified gross leases are always the standard, default lease type for every single Delaware commercial property, though the underlying details naturally shift somewhat depending on the county, the property type, and the specific facts of the transaction at hand
DBoth terms are legally the same under Delaware contract law

Why A gross lease has the landlord paying all operating expenses; a modified gross lease allocates certain expenses to the tenant (e.g., the tenant pays electricity directly) while the landlord covers others — a hybrid between gross and net leases Is Correct

Answer B: A gross lease has the landlord paying all operating expenses; a modified gross lease allocates certain expenses to the tenant (e.g., the tenant pays electricity directly) while the landlord covers others — a hybrid between gross and net leases

In a pure gross lease, the landlord pays all expenses and the tenant pays only base rent. In a modified gross lease (also called a gross lease with stops or partial net), certain expenses are allocated to the tenant beyond base rent — often utilities, janitorial, or expenses above a base year amount.

Exam Tip: Property Management

Property management questions cover landlord-tenant law, security deposits, and maintenance responsibilities. Know the differences between gross, net, and percentage leases.

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