Chapter 10 Flashcards
Which document is a frequent source of confusion for tenants, and why?
The lease-they are drafted by attorneys and many tenants have not read the entire document or understood each clause.
What is the property or facility manager’s role during a lease dispute?
To resolve disputes by having a good working knowledge of the lease.
What is base rent?
The rent paid per the lease.
It is written as a total for the lease term and then broken down to monthly payments
What is abated rent?
Free rent
What should the policy be concerning late charges on tardy rent payments?
If late charges are included in the lease then they should be charged whenever rent is late.
How are late charges calculated?
As a percentage of past due rent
As a percentage of monthly rent
As a flat fee
They may include interest on an outstanding balance
What is the commencement date?
The date the lease obligation begin for the tenant
What is a gross lease?
It is a lease containing base rent only with no additional rent or operating expenses.
What is CPI?
It stands for the Consumer Price Index
What is a pass-through?
It is an agreement between tenant and owner concerning a method of increasing rent in addition to the CPI.
What are two common examples of additional rent?
Operating Expenses
Property Taxes
What is ad valorem?
Taxes levied based on property value (property taxes)
What is a letter of credit?
It is a check from the tenant’s bank, with expiration dates, held instead of cash deposit until it is determined that a claim will be filed on the tenant’s security
What are requirements for interest on security deposits?
Deposits may be required by state law or lease clauses to be held in interest bearing accounts.
What are customary and additional billable services?
Customary-water, electricity, heating & cooling, janitorial
Additional-overtime HVAC, sub-metered electricity, other repairs or replacements
What is a sublease?
It is when the lessee agrees to lease his or her space to a third party
What is holdover rent?
Rent charged when a tenant continues to occupy a space after the lease term expires.
It is expressed as a percentage of base rent. 150% is common.
What is an option to renew?
It is a lease clause that gives the tenant the choice to extend his or her current lease for a specified period of time.
List some examples of non-financial lease clauses.
default insurance certificates cancellation rights personal guarantees use of premises
What is a lease abstract?
It is a form that reminds a reader of important lease clauses to review and flows well with the lease document.
What is a tenant roster?
It is an alphabetical or numerical listing of all current tenants in the building.
What is a rent roll?
It is a quick reference of the entire property that contains information about each tenant.
What is a tenant profile?
It is a printout of data from the lease abstract after it has been entered.
What is a reminder notice?
It is a courtesy reminder of lease obligations
What are rent steps?
Scheduled rent increases in a tenant’s lease
What is a lease expiration report?
It is a list of each tenant’s lease in the order of its expiration date with most current expirations first.
How are late charges normally assessed?
As a percentage of outstanding balance
As a percentage of monthly rent
As a flat fee
Late fees may also include interest on the outstanding balance
What is a lease commencement date?
It is the date on which rental obligation begins.
Define holdover rent.
It is rent charged to a tenant occupying a space after the lease expiration date.
150% is the most common holdover rate.
List some common lease clauses that may require abstraction but do not have direct financial implications.
Default Right of first refusal Insurance certificates cancellation rights personal guarantees use of premises
Security deposits must be returned to the tenant:
a) in accordance with state law
b) immediately upon expiration of the lease
c) ten days after the tenant vacates the space
d) one month after the tenant vacates the space
a) in accordance with state law
Leases are usually drafted by the:
a) tenant
b) landlord
c) tenant’s attorney
d) landlord’s attorney
d) landlord’s attorney
Lease terms and rental payments are generally structured on a(n):
a) semi-annual basis
b) quarterly basis
c) daily basis
d) monthly basis
d) monthly basis
Late charges should be assessed:
a) when the tenant has been late for three months in a row
b) when the tenant is about to default on the lease
c) every month the tenant is late
d) only for a tenant with a questionable credit history
c) every month the tenant is late
The lease abstract form should be designed to:
a) slow down the abstraction process
b) remind the abstractor of typical important lease clauses
c) function as an output document
d) replace the actual lease document
b) remind the abstractor of typical important lease clauses
The first step in finding answers about lease questions is usually:
a) referring to the tenant profile or lease abstract
b) searching trough the lease until the answer is found
c) referring to the relevant clause in the standard lease
d) contacting the lawyer who drew up the lease
a) referring to the tenant profile or lease abstract
