Affiliate Broker Tennessee (TN PSI) National Practice Exam `

Why is Simon's attorney arguing against an absolute net lease?

1. It allows for more lease flexibility

2. It has higher potential revenues

3. It provides no legal defenses if rent is unpaid

4. It requires less maintenance

The correct answer is: It provides no legal defenses if rent is unpaid

An absolute net lease is a type of lease agreement where the tenant is responsible for all costs associated with the property, including taxes, insurance, and maintenance, in addition to the base rent. This structure benefits the landlord, as it maximizes their income and removes financial burdens associated with property ownership. However, from the tenant's perspective, particularly in Simon's case, one of the significant drawbacks is that there are minimal legal defenses available if the rent is unpaid. If a tenant encounters financial difficulties and cannot pay rent, in an absolute net lease scenario, the landlord retains the right to pursue legal action without having to account for any costs they might incur as a result of the property’s upkeep. This leaves the tenant exposed, as there are limited options available to contest the landlord's claims or negotiate the terms of lease compliance. Therefore, the argument against an absolute net lease is centered on the lack of legal protections that could provide relief or defenses in case of non-payment, making the option provided a strong and valid point in Simon's attorney’s argument.