Which type of lease allows for increases in rental rates based on an economic conditions index?

The correct choice is the index lease, which allows for increases in rental rates based on an economic conditions index, such as the consumer price index (CPI). This type of lease is beneficial for both landlords and tenants, as it provides a mechanism for adjusting rent to reflect inflation or changes in the economy, ensuring that the rental income keeps pace with rising costs or economic shifts.

An index lease typically includes specific terms that outline how often the rent can be adjusted and the formula used for those adjustments, creating predictability for both parties. This can help tenants plan their budgets and assist landlords in maintaining the value of their rental income over time.

The other types of leases, such as fixed, variable, and gross, do not incorporate this specific linkage to an economic index for rent adjustments. Fixed leases maintain a consistent rental rate without changes throughout the lease term, while variable leases might allow for predetermined price adjustments that do not directly correlate to an economic index. Gross leases generally include all expenses in the rental amount, also without adjustments based on economic indices.