Hawaii Pre-Licensing National Practice Exam

What is a lease that includes periodic rent increases termed?

1. Net lease

2. Graduated lease

3. Flat lease

4. Standard lease

The correct answer is: Graduated lease

A lease that includes periodic rent increases is known as a graduated lease. This type of lease is structured to allow the landlord to increase the rental amount at predetermined intervals, such as annually or every few years. The increases are usually specified in the lease agreement, providing clarity for both the landlord and tenant regarding future financial obligations. In a graduated lease, the schedule of increases is typically outlined at the beginning of the lease term, ensuring that the tenant is aware of how their rent will change over time. This can be beneficial for landlords in maintaining rental income that keeps pace with inflation or market changes. Other types of leases, such as a net lease, typically focus on the payment of expenses in addition to rent, while a flat lease maintains a consistent rental amount throughout the lease term with no scheduled increases. A standard lease is a more general term that does not specifically imply minor or periodic increases in rent.