Lease Negotiation & Terms Flashcards
7 cards from real CHI 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 requests a lease clause allowing them to sublet the property. Which term best describes the original tenant's ongoing liability if subletting is permitted?
Answer: Privity of contract
Privity of contract means the original tenant remains legally bound to the landlord even when a subtenant occupies the property.
During lease negotiations, the landlord insists on a 'holdover' clause. What does this clause typically specify?
Answer: Tenant's rights after lease expiration without renewal
A holdover clause defines what happens—usually conversion to a month-to-month tenancy at a higher rate—when a tenant stays beyond the lease end date.
A commercial lease includes a 'percentage rent' provision. What does this require the tenant to pay?
Answer: Base rent plus a percentage of gross sales above a threshold
Percentage rent requires tenants—typically retailers—to pay base rent plus a percentage of their gross revenue once sales exceed a specified breakpoint.
Which lease term gives a tenant the right to extend the lease at a pre-negotiated rent without requiring landlord approval?
Answer: Option to renew
An option to renew grants the tenant a unilateral right to extend the lease term at agreed-upon terms, without needing fresh negotiation.
In a triple-net (NNN) lease, which costs are typically the tenant's responsibility?
Answer: Property taxes, insurance, and maintenance
In a triple-net lease, the tenant pays property taxes, building insurance, and maintenance costs in addition to base rent.
A tenant negotiates a 'free rent' period at the beginning of a new lease. This concession is best described as:
Answer: A rent abatement
A rent abatement is a period during which the landlord waives rent entirely, often used as a lease-signing incentive.
What is the purpose of an 'estoppel certificate' in lease negotiations or property transfers?
Answer: It confirms lease terms and status as represented by the tenant
An estoppel certificate is a signed statement by the tenant confirming lease terms, rent amounts, and that no landlord defaults exist, used to protect buyers and lenders.