BOMA BOMA Lease Administration 1 — Questions and Answers
Question 1: Under BOMA standards, which lease type places the most financial risk on the tenant by requiring them to pay all operating expenses in addition to base rent?
- Gross lease
- Net-net lease
- Triple net (NNN) lease (Correct answer)
- Modified gross lease
Correct answer: Triple net (NNN) lease
A triple net lease requires the tenant to pay base rent plus property taxes, insurance, and all operating expenses, placing maximum financial risk on the tenant.
Question 2: The BOMA Standard Method for measuring office buildings is primarily used to determine which lease component?
- Lease term length
- Rentable square footage (Correct answer)
- Tenant improvement allowance
- Security deposit amount
Correct answer: Rentable square footage
The BOMA Standard Method establishes a consistent methodology for calculating rentable square footage, which directly determines the basis for rent calculations.
Question 3: What does the 'load factor' (also called the add-on factor) represent in commercial leasing?
- The ratio of structural load to floor area
- The percentage added to usable area to arrive at rentable area (Correct answer)
- The tenant's proportionate share of utility costs
- The maximum occupancy allowed per square foot
Correct answer: The percentage added to usable area to arrive at rentable area
The load factor is the percentage added to a tenant's usable square footage to account for their share of common areas, converting usable area to rentable area.
Question 4: In a base year lease, what triggers a tenant's obligation to pay operating expense escalations?
- Any increase in property value
- Operating expenses exceeding the base year amount (Correct answer)
- Lease renewal after the first term
- A change in building ownership
Correct answer: Operating expenses exceeding the base year amount
In a base year lease, tenants pay their proportionate share of operating expense increases above the established base year expense level.
Question 5: Which clause in a commercial lease grants the tenant the right to renew their lease at a predetermined rent or at market rate?
- Right of first refusal
- Option to renew clause (Correct answer)
- Holdover clause
- Estoppel clause
Correct answer: Option to renew clause
An option to renew clause gives the tenant a contractual right to extend their lease term, typically requiring advance written notice within a specified timeframe.
Question 6: What is a 'tenant estoppel certificate' used for in commercial real estate?
- To prevent tenants from subletting their space
- To certify the current status and terms of a lease to a third party (Correct answer)
- To document tenant improvement completion
- To establish the tenant's credit worthiness
Correct answer: To certify the current status and terms of a lease to a third party
A tenant estoppel certificate is a signed document in which the tenant confirms current lease terms and status, typically required by lenders or buyers during property transactions.
BOMA BOMA Lease Administration 1
Under BOMA standards, which lease type places the most financial risk on the tenant by requiring them to pay all operating expenses in addition to base rent?