Lease Negotiation & Terms Flashcards
7 cards from real CGA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Lease Negotiation & Terms flashcards as text
A tenant negotiates a 'free rent' period at lease commencement. How should an appraiser treat this concession when estimating market rent?
Answer: Convert it to an effective rent by amortizing the concession over the lease term
Free rent concessions are amortized over the full lease term to derive effective (economic) rent, which is then compared to market rent.
Which lease clause grants the tenant the right to remain in possession at the end of the lease term if no new agreement is reached?
Answer: Holdover provision
A holdover provision defines the tenant's rights and rent obligations when continuing occupancy after lease expiration without a new lease.
Under a triple-net lease, which of the following expenses is the LANDLORD most likely responsible for?
Answer: Structural repairs to the building shell
In a triple-net lease, tenants pay taxes, insurance, and maintenance, but structural repairs to the building shell typically remain the landlord's responsibility.
A CPI escalation clause in a lease ties rent increases to the Consumer Price Index. This clause primarily protects which party?
Answer: The landlord against inflation eroding real rent value
CPI escalation clauses protect the landlord by adjusting rent upward with inflation, preserving the real economic value of the lease income.
When appraising a property with an above-market lease, the appraiser must account for a 'contract rent premium.' This premium is BEST described as:
Answer: The present value of the excess of contract rent over market rent for the remaining lease term
The contract rent premium is the present-value difference between the above-market contract rent and current market rent over the remaining lease term.
A co-tenancy clause in a retail lease typically allows a tenant to:
Answer: Reduce rent or terminate the lease if an anchor tenant vacates
Co-tenancy clauses protect retail tenants by allowing rent reduction or early termination if a named anchor tenant or minimum occupancy threshold is lost.
In lease negotiations, a 'work letter' or 'tenant improvement agreement' primarily addresses:
Answer: The scope, cost, and responsibility for buildout improvements to the leased space
A work letter details what improvements will be made, who pays for them, and the allowance provided by the landlord for tenant buildout.