CHI Lease Negotiation & Terms 3

Question 1

A landlord includes a 'demolition clause' in a lease. What right does this grant the landlord?

Accepted Answer

To terminate the lease early if the building is redeveloped

Answer

A demolition clause allows the landlord to terminate the lease before its natural expiration if the property is scheduled for demolition or major redevelopment.

Question 2

Which lease provision protects a tenant from rent increases tied to rising property taxes or operating costs in a gross lease?

Accepted Answer

Expense stop clause

Answer

An expense stop sets the maximum operating expense amount the landlord absorbs; costs above the stop are passed to the tenant, while a gross lease with no stop shields tenants from all increases.

Question 3

During lease negotiations, a tenant requests a 'co-tenancy clause.' What protection does this provide?

Accepted Answer

Rent reduction rights if a key anchor tenant vacates the property

Answer

A co-tenancy clause allows tenants—especially retailers—to reduce rent or terminate the lease if an anchor tenant departs, reducing customer traffic.

Question 4

What does 'usable square footage' refer to in commercial lease negotiations, as distinct from 'rentable square footage'?

Accepted Answer

The space a tenant actually occupies exclusively, excluding shared areas

Answer

Usable square footage is the space the tenant physically occupies, while rentable square footage adds a proportionate share of common areas such as lobbies and hallways.

Question 5

A 'right of first offer' (ROFO) clause in a lease gives the tenant:

Accepted Answer

The right to be notified and bid before space is offered to others

Answer

A ROFO requires the landlord to present terms to the existing tenant before marketing space or the building to outside parties.

(CHI) Certified Home Inspector Practice Test

(CHI) Certified Home Inspector Practice Test

CHI Lease Negotiation & Terms 3