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Percentage Rental Agreements/Percentage Lease

Definition
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The amount of rent may be a percentage of the gross or net profits of the lessees business, or of
his gross sales, with a stipulated minimum rent, and the liability of the lessee to pay more than
the stipulated minimum depends on the terms of the particular agreement. 1

In leases of property for retail purposes, it is common for all or part of the rent to be expressed in
terms of a percentage of sales made on the premises. 2

Percentage leases ordinarily base rent on gross sales or, less frequently, on net sales or net
profits.3

A type of lease where the tenant pays a base rent plus a percentage of any revenue earned while
doing business on the rental premises. It is a term used in commercial real estate. Percentage
lease agreements can often decrease the base rate while simultaneously providing the lessor
with additional upside potential.4

Example of Percentage lease under Philippine Law:


R.A. 1199 AN ACT TO GOVERN THE RELATIONS BETWEEN LANDHOLDERS AND
TENANTS OF AGRICULTURAL LANDS (LEASEHOLDS AND SHARE TENANCY)
Section 4. Systems of Agricultural Tenancy; Their Definitions. - Agricultural tenancy
is classified into leasehold tenancy and share tenancy.
xxx
Leasehold tenancy exists when a person who, either personally or with the aid of labor
available from members of his immediate farm household, undertakes to cultivate a piece
of agricultural land susceptible of cultivation by a single person together with members of
his immediate farm household, belonging to or legally possessed by, another in
consideration of a price certain or ascertainable to be paid by the person
cultivating the land either in percentage of the production or in a fixed amount in
money, or in both. (emphasis supplied)

1 S502(b), Landlord & Tenant 417 to End-Level, Corpus Juris Secundum


27 POF 655 S24, Am Jur, Proof Facts 3d Series.
3 Id.
4 http://www.investopedia.com/terms/p/percentage-lease.asp