Lease Negotiation & Terms Flashcards
7 cards from real CLP 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
Which type of lease structure shifts the most financial risk to the tenant by requiring payment of base rent plus all operating expenses, taxes, and insurance?
Answer: Triple net (NNN) lease
A triple net lease requires the tenant to pay base rent plus property taxes, insurance, and all maintenance costs, maximizing landlord income predictability.
A retail lease includes a percentage rent clause with a 'natural breakpoint.' How is the natural breakpoint calculated?
Answer: Annual base rent divided by the percentage rate
The natural breakpoint is the sales volume at which percentage rent kicks in, calculated by dividing annual base rent by the percentage rate.
A landlord negotiates a 'demolition clause' into a lease. What does this clause typically allow?
Answer: The landlord to terminate the lease if redevelopment of the building is planned
A demolition clause gives the landlord the right to terminate the lease early if the building is slated for demolition or major redevelopment.
In lease negotiations, what is the purpose of a 'holdover provision'?
Answer: It defines the rent and conditions that apply if the tenant remains after the lease expires without a new agreement
A holdover provision sets the terms—typically higher rent on a month-to-month basis—when a tenant stays in possession after the lease expires.
A tenant requests that the landlord include a 'continuous operation' clause waiver. Why might a landlord resist this request?
Answer: Without continuous operation, the tenant could go dark and still pay only base rent, eliminating percentage rent income
Landlords resist waiving continuous operation because a dark store still pays base rent but eliminates percentage rent and reduces center traffic and co-tenancy.
What is the key distinction between a lease 'renewal option' and a lease 'extension option'?
Answer: Renewal creates a new lease; extension continues the existing lease
A renewal option results in a new, separate lease agreement while an extension option simply prolongs the existing lease under the same terms.
During lease negotiation, what does 'dark clause protection' guard against for a co-tenant in a retail center?
Answer: An anchor going out of business and vacating, harming remaining tenants
Dark clause protection gives smaller tenants lease relief—rent reduction or termination rights—when an anchor store closes and foot traffic drops significantly.