A tenant is required to pay additional amounts to the landlord when business volume increases. This tenant MOST likely has what type of lease?

The correct answer is that the tenant is most likely under a percentage lease. In a percentage lease, the landlord receives a portion of the tenant's business revenue in addition to the base rent, making the total rent variable based on the tenant's business performance. This structure is especially common in retail environments where a landlord can benefit from the increased sales of their tenants.

The percentage lease aligns the interests of both the landlord and the tenant, encouraging the landlord to support the tenant's success since higher sales translate into higher rental income for the landlord. This type of arrangement not only provides a steady base rent but also allows the tenant to manage their fixed costs while scaling down costs when business is slow.

In contrast, other lease types such as a flat lease or gross lease do not include such provisions tied to business volume. A flat lease features a fixed rent with no variations, while a gross lease combines various expenses into a single rent payment, leaving the landlord to cover additional costs like maintenance and utilities without any connection to the tenant’s revenue. A net lease may have different cost arrangements but typically doesn’t involve revenue sharing.