BOMA Lease Administration Flashcards

What does 'holdover tenancy' mean in a commercial lease context?

Answer: A tenant who continues occupying space after lease expiration without signing a new lease

A holdover tenancy occurs when a commercial tenant remains in possession of leased space after their lease expires, often converting to a month-to-month tenancy at a higher rent rate.

Under the BOMA 2017 Office Building Standard, how is 'usable area' defined?

Answer: The area available for the exclusive use of the tenant, excluding common areas

Usable area under BOMA standards is the floor area actually available for the tenant's exclusive occupancy, excluding common corridors, restrooms, mechanical spaces, and other shared areas.

What is an 'operating expense cap' or 'expense stop' provision designed to protect?

Answer: The tenant from unlimited increases in controllable operating expense pass-throughs

An operating expense cap limits the annual increase in controllable expenses (like management fees and janitorial costs) that can be passed through to tenants, protecting them from excessive cost escalations.

What is a 'first right of refusal' clause in a commercial lease?

Answer: The tenant's right to lease additional space before it is offered to other prospective tenants

A right of first refusal gives the tenant the opportunity to lease adjacent or additional space at the same terms offered to a third party before the landlord leases it to someone else.

In commercial real estate, what is the difference between 'assignment' and 'subletting' a lease?

Answer: Assignment transfers all lease rights permanently while subletting transfers possession for part of the term or space with the original tenant retaining liability

In an assignment, the tenant transfers all lease rights to a new party who becomes directly responsible to the landlord, while subletting involves the original tenant creating a separate lease with a subtenant while remaining liable to the landlord.

What is 'effective rent' and why is it important in lease comparison?

Answer: The average rent over the lease term after accounting for concessions like free rent and tenant improvement allowances

Effective rent normalizes different lease structures by calculating the true average cost per square foot over the lease term after accounting for all landlord concessions, enabling accurate comparison of lease alternatives.