BOMA Lease Administration & Finance

Question 1

In a typical commercial 'triple net' (NNN) lease, what costs does the tenant pay in addition to base rent?

Accepted Answer

Property taxes, insurance, and maintenance/operating expenses

Answer

In a triple net lease, tenants pay base rent plus their pro-rata share of property taxes, building insurance, and operating/maintenance expenses.

Question 2

What is a 'base year' in a commercial office lease?

Accepted Answer

The year whose operating expense level is used as the baseline for future expense pass-throughs

Answer

The base year establishes the operating expense level the landlord absorbs; tenants pay their pro-rata share of expenses that exceed the base year amount.

Question 3

What does 'expense stop' mean in a commercial lease?

Accepted Answer

A fixed dollar amount per square foot above which the tenant pays operating expenses

Answer

An expense stop is a fixed dollar amount per rentable square foot; the landlord pays expenses up to that amount, and the tenant pays any excess.

Question 4

What is a 'tenant improvement allowance' (TIA) in commercial leasing?

Accepted Answer

Money provided by the landlord to fund build-out of the tenant's space

Answer

A Tenant Improvement Allowance is a landlord-provided sum used to fund construction and improvements customizing the space to the tenant's requirements.

Question 5

In commercial real estate, what is a 'gross lease'?

Accepted Answer

A lease where the landlord pays all operating expenses and the tenant pays only a fixed base rent

Answer

In a gross lease, the tenant pays a single fixed rent amount and the landlord is responsible for paying all operating expenses out of that rent.

BOMA - Building Owners & Managers Association Practice Test

BOMA - Building Owners & Managers Association Practice Test

BOMA Lease Administration & Finance