CGA Tenant Relations & Retention 3 — Questions and Answers
Question 1: A landlord who accepts rent from a holdover tenant without signing a new lease has likely created what type of tenancy?
- Tenancy at sufferance
- Tenancy at will
- Month-to-month periodic tenancy (Correct answer)
- Joint tenancy
Correct answer: Month-to-month periodic tenancy
Accepting rent from a holdover tenant typically converts the tenancy to a month-to-month periodic tenancy, implying both parties consent to continue under prior lease terms.
Question 2: Which factor is LEAST relevant when evaluating tenant retention risk in a commercial property appraisal?
- Remaining lease term
- Tenant's credit rating
- Color scheme of tenant's store (Correct answer)
- Lease renewal options
Correct answer: Color scheme of tenant's store
A tenant's interior decor choices do not affect their financial ability to pay rent or their likelihood of renewing, making it irrelevant to retention risk analysis.
Question 3: What does a 'dark clause' in a retail lease allow a tenant to do?
- Operate during nighttime hours only
- Stop operating while continuing to pay rent (Correct answer)
- Sublet without landlord approval
- Reduce lighting costs via energy credits
Correct answer: Stop operating while continuing to pay rent
A dark clause permits a tenant to cease operations (go dark) while still fulfilling rent obligations, which can harm co-tenants and reduce foot traffic.
Question 4: When appraising a property with below-market leases, how are the leased fee and leasehold interests typically valued?
- Leased fee value exceeds fee simple; leasehold has no value
- Leased fee is below fee simple value; leasehold interest has positive value (Correct answer)
- Both interests equal fee simple value
- Leased fee equals leasehold when leases are below market
Correct answer: Leased fee is below fee simple value; leasehold interest has positive value
Below-market leases reduce the leased fee value below fee simple, while simultaneously creating a valuable leasehold interest for the tenant who pays less than market rent.
Question 5: In property management, what is the primary purpose of conducting regular tenant satisfaction surveys?
- Documenting lease violations
- Identifying issues before they escalate into non-renewals (Correct answer)
- Calculating rental market data for appraisals
- Complying with federal housing regulations
Correct answer: Identifying issues before they escalate into non-renewals
Tenant satisfaction surveys proactively identify dissatisfaction so management can address concerns before tenants choose not to renew, directly supporting retention goals.
Question 6: Which lease structure makes a tenant most responsible for operating expense increases?
- Gross lease
- Modified gross lease
- Net lease (Correct answer)
- Percentage lease
Correct answer: Net lease
In a net lease (particularly triple-net), the tenant pays base rent plus all or most operating expenses directly, assuming the risk of expense increases.
Question 7: An appraiser notes that a multi-tenant office building has a 40% rollover of leases in the next 12 months. This is BEST described as a:
- Stabilized income indicator
- Significant lease-up risk factor (Correct answer)
- Positive absorption signal
- Net operating income enhancement
Correct answer: Significant lease-up risk factor
High near-term lease rollover creates significant income uncertainty because multiple tenants may vacate or renegotiate at lower rates, representing a material risk to NOI.
CGA Tenant Relations & Retention 3
A landlord who accepts rent from a holdover tenant without signing a new lease has likely created what type of tenancy?