CGA Tenant Relations & Retention 2 — Questions and Answers
Question 1: Which lease clause gives a landlord the right to relocate a tenant to a comparable space within the same building?
- Subordination clause
- Relocation clause (Correct answer)
- Estoppel clause
- Attornment clause
Correct answer: Relocation clause
A relocation clause grants landlords flexibility to move tenants to equivalent space, typically with advance notice and reimbursement of moving costs.
Question 2: When a tenant exercises a right of first refusal to purchase a property, what triggers this right?
- Lease expiration
- Landlord's decision to sell to a third party (Correct answer)
- Tenant's request to buy
- Rent increase above CPI
Correct answer: Landlord's decision to sell to a third party
A right of first refusal is triggered when the landlord receives a bona fide offer from a third party and must offer the tenant the same terms before accepting.
Question 3: In commercial real estate, a 'gross-up' provision in a lease primarily benefits which party?
- Tenant
- Landlord (Correct answer)
- Both equally
- Neither party
Correct answer: Landlord
A gross-up provision allows landlords to calculate operating expenses as if the building were fully occupied, preventing under-recovery of expenses when vacancy exists.
Question 4: A tenant improvement allowance (TIA) that exceeds actual construction costs typically results in what outcome for the tenant?
- Rent credit applied to future months (Correct answer)
- Forfeiture of the excess amount
- Cash payment to tenant
- Reduction in lease term
Correct answer: Rent credit applied to future months
Excess TIA funds are most commonly applied as rent credits rather than paid as cash, though lease terms vary and should be reviewed carefully.
Question 5: What is 'co-tenancy' in retail leases?
- Two tenants sharing one space
- A provision allowing rent reduction if anchor tenants leave (Correct answer)
- Joint ownership of leasehold interest
- A sublease arrangement between retailers
Correct answer: A provision allowing rent reduction if anchor tenants leave
Co-tenancy clauses protect smaller retailers by allowing rent reduction or early termination if a major anchor tenant vacates, reducing foot traffic.
Question 6: Which method of resolving landlord-tenant disputes is generally the fastest and least expensive?
- Litigation in state court
- Federal arbitration
- Mediation (Correct answer)
- Administrative hearing
Correct answer: Mediation
Mediation is typically the fastest and least costly dispute resolution method because a neutral mediator facilitates voluntary agreement without imposing a binding decision.
Question 7: From an appraisal standpoint, above-market leases signed by credit tenants are most likely to affect property value how?
- Decrease value due to overpayment risk
- Increase value due to higher NOI and creditworthy income stream (Correct answer)
- Have no effect because leases don't affect value
- Decrease value because above-market leases expire faster
Correct answer: Increase value due to higher NOI and creditworthy income stream
Above-market leases with credit tenants increase NOI and reduce income risk, which investors discount at lower cap rates, increasing market value.
CGA Tenant Relations & Retention 2
Which lease clause gives a landlord the right to relocate a tenant to a comparable space within the same building?