CLP Lease Negotiation & Terms 3

Question 1

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?

Accepted Answer

Triple net (NNN) lease

Answer

A triple net lease requires the tenant to pay base rent plus property taxes, insurance, and all maintenance costs, maximizing landlord income predictability.

Question 2

A retail lease includes a percentage rent clause with a 'natural breakpoint.' How is the natural breakpoint calculated?

Accepted Answer

Annual base rent divided by the percentage rate

Answer

The natural breakpoint is the sales volume at which percentage rent kicks in, calculated by dividing annual base rent by the percentage rate.

Question 3

A landlord negotiates a 'demolition clause' into a lease. What does this clause typically allow?

Accepted Answer

The landlord to terminate the lease if redevelopment of the building is planned

Answer

A demolition clause gives the landlord the right to terminate the lease early if the building is slated for demolition or major redevelopment.

Question 4

In lease negotiations, what is the purpose of a 'holdover provision'?

Accepted Answer

It defines the rent and conditions that apply if the tenant remains after the lease expires without a new agreement

Answer

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.

Question 5

A tenant requests that the landlord include a 'continuous operation' clause waiver. Why might a landlord resist this request?

Accepted Answer

Without continuous operation, the tenant could go dark and still pay only base rent, eliminating percentage rent income

Answer

Landlords resist waiving continuous operation because a dark store still pays base rent but eliminates percentage rent and reduces center traffic and co-tenancy.

(CLP) Certified Leasing Professional Practice Test

(CLP) Certified Leasing Professional Practice Test

CLP Lease Negotiation & Terms 3