Lease Origination and Structure 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 Origination and Structure flashcards as text
A landlord's decision to offer tenant improvement (TI) allowance is PRIMARILY based on which factor?
Answer: The creditworthiness and lease term length of the tenant
TI allowances are primarily sized based on tenant credit quality and lease duration, as stronger tenants with longer leases justify greater landlord investment.
An 'as-is' lease clause means the tenant accepts the space:
Answer: In its current condition without landlord representations about its state
An 'as-is' clause means the tenant accepts the space in its current condition, and the landlord makes no warranties about the condition or fitness of the premises.
In a sale-leaseback transaction, which party becomes the landlord after the deal closes?
Answer: The buyer/investor
In a sale-leaseback, the original owner sells the property to an investor and immediately leases it back, making the buyer the new landlord.
Which provision in a commercial lease protects the tenant's operations by prohibiting the landlord from leasing nearby space to direct competitors?
Answer: Exclusive use clause
An exclusive use clause grants the tenant the sole right to operate a specific type of business within the property or shopping center.
During lease origination, what is the primary purpose of conducting a market rent survey?
Answer: To benchmark asking rent against comparable properties
A market rent survey provides data on comparable lease transactions to ensure the landlord's asking rent is competitive and supportable.
A lease that automatically converts to a month-to-month tenancy if neither party provides notice before expiration is said to contain a:
Answer: Holdover provision
A holdover provision specifies what happens when a tenant remains in possession after lease expiration, often resulting in month-to-month tenancy at a higher rent rate.
When calculating effective rent, a leasing professional should account for all of the following EXCEPT:
Answer: The landlord's mortgage interest rate
Effective rent calculations incorporate concessions like free rent and TI allowances but do not include the landlord's financing costs, which are a landlord-side consideration.