Which lease arrangement involves the owner selling the property and then leasing it back?

Which lease arrangement involves the owner selling the property and then leasing it back?

• A. Sale & Leaseback
• B. Proprietary Lease
• C. Escalated Lease
• D. Index Lease

Answer: (A)

This is a sale-leaseback. In this arrangement, the owner sells the property to an investor and immediately signs a lease to continue using the space as a tenant. It lets the seller convert a real asset into cash while maintaining occupancy, and it gives the buyer a predictable rental income. The other concepts don’t fit this exact scenario. A proprietary lease is used in cooperative housing and grants occupancy rights rather than a sale and rent-back of the property. An escalated lease involves rent that increases over time by a set schedule, not the sale of the asset. An index lease ties rent to a published index, like the CPI, also not about selling and then leasing back.

This is a sale-leaseback. In this arrangement, the owner sells the property to an investor and immediately signs a lease to continue using the space as a tenant. It lets the seller convert a real asset into cash while maintaining occupancy, and it gives the buyer a predictable rental income.

The other concepts don’t fit this exact scenario. A proprietary lease is used in cooperative housing and grants occupancy rights rather than a sale and rent-back of the property. An escalated lease involves rent that increases over time by a set schedule, not the sale of the asset. An index lease ties rent to a published index, like the CPI, also not about selling and then leasing back.