CLP Lease Origination and Structure 3

Question 1

Which lease provision specifies the tenant's right to expand into adjacent space if it becomes available?

Accepted Answer

Expansion option

Answer

An expansion option gives the tenant a contractual right to lease additional space, usually at a predetermined rent or formula.

Question 2

A tenant negotiates a lease with rent increases tied to the Consumer Price Index (CPI). This structure is called a(n):

Accepted Answer

Escalation clause with CPI index

Answer

A CPI escalation clause adjusts rent periodically based on changes in the Consumer Price Index to keep pace with inflation.

Question 3

In commercial leasing, 'usable square footage' differs from 'rentable square footage' because rentable square footage:

Accepted Answer

Includes a proportionate share of common areas

Answer

Rentable square footage adds a load factor (pro-rata share of common areas like lobbies and hallways) to the usable square footage a tenant occupies.

Question 4

A prospective commercial tenant with limited credit history offers a larger security deposit to secure a lease. Which additional credit enhancement might a landlord also request?

Accepted Answer

Personal or corporate guarantee

Answer

A personal or corporate guarantee makes a third party liable for the tenant's obligations, providing additional security beyond the deposit.

Question 5

The clause in a lease that requires the tenant to keep the space open and operating during required hours is called a:

Accepted Answer

Continuous operation clause

Answer

A continuous operation clause obligates the tenant to remain open for business during specified hours, which is especially important in retail settings.

(CLP) Certified Leasing Professional Practice Test

(CLP) Certified Leasing Professional Practice Test

CLP Lease Origination and Structure 3