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 lease contains a 'subordination, non-disturbance, and attornment' (SNDA) agreement. What does the non-disturbance component protect?
Answer: The tenant's right to remain in possession if the landlord's lender forecloses
The non-disturbance clause ensures the tenant will not be evicted by a foreclosing lender as long as the tenant is not in default under the lease.
Under a 'gross lease' structure, who typically pays for utilities, maintenance, and property taxes?
Answer: Landlord includes most or all operating costs in a single rent payment
In a gross lease, the landlord bundles operating expenses into one rent figure, simplifying budgeting for the tenant.
What is a 'kick-out clause' in commercial leases?
Answer: A right allowing either party to terminate the lease if sales targets are not met
A kick-out clause—often used in retail leases—lets the landlord or tenant terminate the lease if the tenant's sales fall below a predetermined threshold.
Which document is used to formally record a lease on public property records, providing notice to third parties of the tenant's interest?
Answer: Memorandum of lease
A memorandum of lease (or short-form lease) is recorded in public records to put buyers and lenders on notice of the tenant's leasehold rights without disclosing confidential lease terms.
During lease negotiations for a home inspector's office space, a 'base year' is established for operating expenses. What happens in subsequent years?
Answer: The tenant pays only the increase in operating expenses above the base year level
Once a base year is set, the tenant is responsible for their pro-rata share of any operating cost increases above that base year amount.
A 'build-to-suit' lease arrangement means:
Answer: The landlord constructs a property to the tenant's specifications before lease commencement
In a build-to-suit lease, the landlord finances and constructs a new building designed specifically for the tenant's use, then leases it back under agreed terms.
What is the primary purpose of including a 'force majeure' clause in a lease agreement?
Answer: To excuse performance obligations when extraordinary events beyond a party's control occur
A force majeure clause suspends or excuses lease obligations when unforeseeable events—such as natural disasters, pandemics, or war—prevent performance.