In a net lease, which costs are typically paid by the tenant in addition to base rent?

• A. Base rent only
• B. Base rent plus taxes, insurance, and CAM
• C. Base rent plus all utilities
• D. CAM charges only

Answer: (B)

In a net lease, the tenant pays base rent plus operating expenses that keep the property running. The costs typically passed through to the tenant are property taxes, property insurance, and CAM (common area maintenance). CAM covers the upkeep of shared spaces like hallways, lobbies, parking areas, landscaping, and often some utilities for those areas, along with management fees. Utilities for the tenant’s own space are usually billed separately or included in CAM depending on the lease, but the standard net lease structure centers on base rent plus taxes, insurance, and CAM. This is why the description that includes base rent plus taxes, insurance, and CAM aligns with how net leases are commonly structured. The other options omit or replace one of these key components.