BOMA Lease Administration & Finance

Question 1

In a typical commercial 'triple net' (NNN) lease, what costs does the tenant pay in addition to base rent?

Accepted Answer

Property taxes, insurance, and maintenance/operating expenses

Answer

Utility costs and janitorial services only

Answer

Capital improvements and structural repairs

Answer

Management fees and leasing commissions

Question 2

What is a 'base year' in a commercial office lease?

Accepted Answer

The year whose operating expense level is used as the baseline for future expense pass-throughs

Answer

The first year of the lease term used to calculate annual rent escalations

Answer

The year the building was constructed for depreciation purposes

Answer

The fiscal year used for landlord financial reporting

Question 3

What does 'expense stop' mean in a commercial lease?

Accepted Answer

A fixed dollar amount per square foot above which the tenant pays operating expenses

Answer

A clause limiting how much expenses can increase annually

Answer

The termination of expense reconciliation after lease expiration

Answer

A cap on the landlord's controllable operating expenses

Question 4

What is a 'tenant improvement allowance' (TIA) in commercial leasing?

Accepted Answer

Money provided by the landlord to fund build-out of the tenant's space

Answer

A rent reduction given to tenants who improve the building's energy rating

Answer

Reimbursement to tenants for costs of maintaining their leased space

Answer

A security deposit credit applied to the first month's rent

Question 5

In commercial real estate, what is a 'gross lease'?

Accepted Answer

A lease where the landlord pays all operating expenses and the tenant pays only a fixed base rent

Answer

A lease calculated on the building's gross square footage including common areas

Answer

A lease where operating expenses are grossed up to reflect full occupancy

Answer

A lease where rent is based on a percentage of the tenant's gross revenue

Question 6

What is 'rent abatement' in a commercial lease negotiation?

Accepted Answer

A period during which the tenant pays no or reduced rent, typically at lease commencement

Answer

A permanent reduction in rent due to building deficiencies

Answer

A penalty assessed when the landlord fails to complete tenant improvements on time

Answer

A rent credit applied when operating expenses decrease below the base year