CRECI Commercial Lease Analysis 2

Question 1

In a percentage lease, what does the 'breakpoint' refer to?

Accepted Answer

The sales volume at which percentage rent kicks in

Answer

The breakpoint is the sales threshold above which the tenant pays additional percentage rent on top of base rent.

Question 2

Which lease clause grants a tenant the right to match any competing offer before the landlord accepts it from a third party?

Accepted Answer

Right of first refusal

Answer

A right of first refusal allows the tenant to match a third-party offer and acquire the space or property on the same terms.

Question 3

A 'gross-up' provision in a commercial lease typically benefits the landlord by:

Accepted Answer

Adjusting operating expenses to reflect full building occupancy

Answer

Gross-up provisions normalize operating expense calculations as if the building were 95-100% occupied, preventing low-occupancy years from understating tenant expense obligations.

Question 4

Under a triple-net (NNN) lease, which of the following costs is typically the LANDLORD'S responsibility?

Accepted Answer

Structural repairs to the roof and foundation

Answer

In most NNN leases, structural elements such as the roof and foundation remain the landlord's responsibility while the tenant covers taxes, insurance, and maintenance.

Question 5

What is the purpose of an 'estoppel certificate' in commercial real estate?

Accepted Answer

To confirm the current status and terms of a lease for a third party

Answer

An estoppel certificate is a signed statement by the tenant confirming the lease terms, rent status, and any defaults, typically required during property sales or refinancing.

(CRECI) Commercial Real Estate Certification Institute Practice Test

(CRECI) Commercial Real Estate Certification Institute Practice Test

CRECI Commercial Lease Analysis 2