Maria manages a large industrial park in Edmonton. One of her tenants, 'Acme Manufacturing,' operating under a net lease, experiences a significant increase in their property tax assessment due to local municipal reassessment. Assuming the lease language is standard for a net lease, what is Acme Manufacturing's responsibility regarding this increased cost?

Question: Maria manages a large industrial park in Edmonton. One of her tenants, 'Acme Manufacturing,' operating under a net lease, experiences a significant increase in their property tax assessment due to local municipal reassessment. Assuming the lease language is standard for a net lease, what is Acme Manufacturing's responsibility regarding this increased cost?

Answer options:

• The landlord absorbs the increased property tax as it is a fixed building expense. ✅ Acme Manufacturing is responsible for paying the increased property tax directly.
• The landlord pays the property tax, but passes the increase through as part of CAM charges.
• Acme Manufacturing can appeal the assessment, but the landlord remains responsible for payment.

Correct answer: Acme Manufacturing is responsible for paying the increased property tax directly.

Explanation: In a net lease, the tenant is typically responsible for paying property taxes, insurance, and utilities in addition to base rent. Therefore, any increase in these costs directly affects the tenant.