Which type of lease allows for flexible payment adjustments based on a tenant's sales activity?

The type of lease that allows for flexible payment adjustments based on a tenant's sales activity is known as a percentage lease. This lease structure is commonly used in retail settings where a tenant pays a base rent plus a percentage of their sales revenue. This means that the landlord's income can vary with the tenant's business performance.

This arrangement is beneficial for both parties: the tenant may have lower fixed costs when sales are low, thus providing them with more financial flexibility. On the other hand, landlords can benefit from increased rent when the tenant's sales are strong, aligning the landlord's income more closely with the success of the tenant's business. This aligns the interests of both parties and is particularly common in shopping malls and retail centers.

In contrast, the other types of leases—such as fixed leases, gross leases, and standard leases—do not include such flexible payment structures based on sales performance. Fixed leases provide stable, unchanging payments, while gross leases typically include expenses such as property taxes and insurance in a single rent payment, and standard leases are a more generic term that doesn’t imply any sales-related adjustments. Thus, the percentage lease uniquely accommodates sales variability.