CGA Lease Negotiation & Terms 3

Question 1

A lease with a 'recapture clause' allows the landlord to:

Accepted Answer

Terminate the lease and reclaim the space if the tenant requests consent to sublease or assign

Answer

A recapture clause gives the landlord the right to terminate the lease and retake the space when a tenant seeks to sublease or assign, capturing any increased market value.

Question 2

Which of the following best describes a 'step-up' lease?

Accepted Answer

A lease where rent increases are predetermined at specified intervals throughout the lease term

Answer

A step-up (or graduated) lease specifies fixed rent increases at predetermined dates, providing both parties with rent certainty.

Question 3

An appraiser is valuing an office building where a major tenant has a 'right of first offer' (ROFO). How does ROFO affect property value?

Accepted Answer

It may reduce value by restricting the owner's ability to sell at full market price

Answer

A ROFO can reduce marketability and value by requiring the owner to offer the property to the tenant first, potentially limiting competitive bidding from outside buyers.

Question 4

In a percentage lease, the 'natural breakpoint' is calculated as:

Accepted Answer

Base rent divided by the percentage rent rate

Answer

The natural breakpoint is base rent divided by the percentage rate; sales above this amount trigger percentage rent payments to the landlord.

Question 5

A lease provision requiring the tenant to maintain the property in good condition and surrender it in the same state is known as:

Accepted Answer

A yield-up or surrender clause

Answer

A yield-up or surrender clause specifies the condition in which the tenant must return the premises to the landlord at lease expiration.

(CGA) Certified General Appraiser Practice Test

(CGA) Certified General Appraiser Practice Test

CGA Lease Negotiation & Terms 3