Legal and Risk Management Flashcards

What is 'risk transfer' in property risk management?

Answer: Shifting financial responsibility for a risk to another party, typically through insurance or contract

Risk transfer shifts the financial consequences of a risk to another party, most commonly through purchasing insurance or including indemnification clauses in contracts.

A lease clause requiring the tenant to indemnify the landlord for injuries caused by the tenant's negligence is known as a:

Answer: Hold harmless agreement

A hold harmless (indemnification) clause requires one party to protect the other from liability arising from the first party's actions.

What does an 'estoppel certificate' confirm in commercial real estate?

Answer: The current status and terms of a lease as acknowledged by the tenant

An estoppel certificate is a signed tenant statement confirming the lease terms, rent amounts, and whether the landlord is in default—used in sale or financing transactions.

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

Answer: To protect the tenant's lease rights if the lender forecloses on the property

An SNDA ensures a tenant's lease survives a foreclosure (non-disturbance) in exchange for the tenant recognizing the new owner's authority (attornment).

Under the Americans with Disabilities Act, which properties must comply with accessibility requirements for public accommodations?

Answer: All commercial facilities open to the public regardless of age

Title III of the ADA requires all places of public accommodation—regardless of age—to remove architectural barriers to the extent readily achievable.

What is a 'risk avoidance' strategy in property management?

Answer: Choosing not to engage in activities that expose the property to certain risks

Risk avoidance means eliminating a risk by choosing not to undertake the activity that creates it, such as declining to allow hazardous uses in a property.