Which term refers to the arrangement where a lessee pays only for the use of the property and the lessor pays the property expenses?

The correct term for the arrangement where a lessee pays only for the use of the property while the lessor is responsible for property expenses is known as a gross lease. In a gross lease, the landlord or lessor covers operating expenses such as property taxes, insurance, and maintenance, allowing the tenant to pay a fixed monthly rent without worrying about these additional costs. This type of lease is common in various real estate contexts, especially in commercial leasing situations, where simplicity and predictability of costs are appealing to tenants.

In contrast, other types of leases have different structures. In a net lease, for example, the tenant pays a base rent plus some or all of the property expenses. A percentage lease typically involves rent based on a percentage of the lessee's sales revenue, commonly used in retail environments. Lastly, a proprietary lease is associated with cooperative housing arrangements where tenants have an ownership interest. Thus, understanding the distinctions between these leases reinforces the importance of knowing leasing terminology in real estate transactions.