This is part of a contract/lease agreement and I was wondering if someone could explain it to me
Construction / Development Lawyer
In a lease with a percentage rent provision, the landlord will receive a minimum amount of rent (called the annual fixed rent or annual minimum rent) and, in the event the tenant's gross sales increase over a certain amount (sometimes called the "breakpoint"), the landlord will also receive a certain percentage of the gross sales over the breakpoint. If the parties intend that the landlord should receive a certain percentage of the tenant's total gross sales, then a "natural breakpoint" will be used. A "natural breakpoint" is the amount of gross sales that, when multiplied by the applicable percentage, equals the amount of annual fixed rent [natural breakpoint x _____% = annual fixed rent]. Stated another way, it is determined by dividing annual fixed rent by the applicable percentage [natural breakpoint = annual fixed rent ÷ ____%].
This answer does not create an attorney-client relationship. Please review my website for further information at www.legalteamusa.com.