CLP Lease Origination and Structure 2

Question 1

A prospective tenant requests a lease with a fixed rent for the entire 10-year term. What type of lease structure does this describe?

Accepted Answer

Flat lease

Answer

A flat lease (also called a straight lease) maintains the same rent amount throughout the entire lease term.

Question 2

Which document typically precedes a formal commercial lease and outlines the basic terms both parties intend to negotiate?

Accepted Answer

Letter of intent (LOI)

Answer

A letter of intent (LOI) is a non-binding preliminary document that outlines the key deal points before a formal lease is drafted.

Question 3

In a net lease, which expense does the tenant typically pay directly in addition to base rent?

Accepted Answer

Property taxes

Answer

In a net lease, tenants pay base rent plus some or all operating expenses such as property taxes, insurance, and maintenance.

Question 4

A lease clause that allows the landlord to recapture the space if the tenant's sales fall below a minimum threshold is called a:

Accepted Answer

Kick-out clause

Answer

A kick-out clause (also called a co-tenancy or termination clause) allows one party to terminate the lease if certain performance benchmarks are not met.

Question 5

When originating a retail lease, which factor is MOST important for determining base rent in a percentage lease?

Accepted Answer

Breakpoint sales volume

Answer

In a percentage lease, the breakpoint is the sales level at which the tenant begins paying percentage rent above the base rent.

(CLP) Certified Leasing Professional Practice Test

(CLP) Certified Leasing Professional Practice Test

CLP Lease Origination and Structure 2