BOMA Lease Administration Flashcards

What does 'CAM reconciliation' involve in commercial property management?

Answer: Comparing actual common area maintenance costs to estimated charges collected from tenants

CAM reconciliation compares the actual common area maintenance expenses incurred during the year to the estimated CAM charges already collected from tenants, resulting in either a refund or additional charge.

Under BOMA guidelines, which of the following costs is typically EXCLUDED from operating expense pass-throughs to tenants?

Answer: Mortgage principal payments

Mortgage principal payments are capital financing costs that benefit the owner, not building operations, and are therefore excluded from tenant operating expense pass-throughs.

What is the primary purpose of a 'subordination, non-disturbance, and attornment' (SNDA) agreement?

Answer: To protect both the lender and tenant's rights in the event of foreclosure

An SNDA agreement protects tenants by ensuring their lease remains in force if the property is foreclosed, while the tenant agrees to recognize a new owner and the lender's lien takes priority.

In commercial leasing, what is 'percentage rent'?

Answer: Additional rent based on a percentage of the tenant's gross sales above a specified breakpoint

Percentage rent is additional rent paid by retail tenants based on a specified percentage of their gross sales once sales exceed a natural or artificial breakpoint.

What does 'co-tenancy' clause protection provide to a retail tenant?

Answer: Rent reduction or termination rights if key anchor tenants leave the property

A co-tenancy clause allows a retail tenant to reduce rent or terminate their lease if specified anchor tenants or a minimum percentage of the center's tenants vacate, protecting them from reduced foot traffic.

What is the significance of a 'lease commencement date' versus a 'rent commencement date'?

Answer: Lease commencement starts legal obligations while rent commencement is when rent payments begin, often after a free rent period

The lease commencement date establishes when the lease term begins and legal obligations arise, while the rent commencement date is when actual rent payments start, often delayed to allow for tenant improvements.