Commercial/Investment A

Question 1

The Internal Revenue Code Section that allows a taxpayer to sell an investment property and purchase another investment property in its place without paying capital gains on the proceeds from the sale.

Answer 1

1031 Exchange

Question 2

An act in which tenants acknowledge their obligations to a new landlord.

Answer 2

Attornment

Question 3

The minimum amount of rent indicated in a lease.

Answer 3

Base Rent

Question 4

All costs incurred in maintaining the common areas of a commercial property including parking lot sweeping and repair, snow removal, common utilities, landscaping, and other maintenance tasks. These costs are usually prorated among all tenants.

Answer 4

CAM (Common Area Maintenance)

Question 5

An index published monthly by the United States Bureau of Labor Standards (BLS) considered by many to be the basic indicator of inflation in the US.

Answer 5

Consumer Price Index (CPI)

Question 6

Lease clause that provides for an increase in rent to reflect increases in expenses paid by the landlord, such as real estate taxes, operating costs, and cost of living expenses.

Answer 6

Escalation Clause

Question 7

Legal doctrine that prevents a person from asserting rights or facts inconsistent with earlier actions or statements

Answer 7

Estoppel

Question 8

Commission payment is determined by an agreement in which a fixed dollar amount is paid for the performance of specific real estate services; payment usually requires the successful completion of the transaction.

Answer 8

Fixed Fee

Question 9

Commission payment that is determined by multiplying the agreed upon percentage by the actual sale price of the property.

Answer 9

Fixed Percentage

Question 10

A possessory interest in real property of uncertain (and often unlimited) duration; an ownership estate in real property; either a fee simple or life estate. Holder of freehold estate has title.

Answer 10

Freehold Estate

Question 11

A lease that specifies step-by-step rent increases, generally paid at set intervals

Answer 11

Graduated Lease

Question 12

Commission payment in which the compensation percentages are set on a graduated scale.

Answer 12

Graduated Percentage

Question 13

A lease for which the tenant pays a fixed amount to the landlord and the landlord is responsible for paying all expenses.

Answer 13

Gross Lease

Question 14

Licensees are paid based on an advanced payment agreement or retainer or a fee based on hours worked. In these situations the retainer or _____ ____ is usually paid even when transactions do not close.

Answer 14

Hourly Fee

Question 15

A lease in which the amount of the rent is tied to some common index indicator such as the Consumer Price Index or the Wholesale Price Index. As the agreed upon index increases, the rent goes up by the same percent of change.

Answer 15

Index Lease

Question 16

Lease under which the tenant leases only the land from the owner, but the tenant owns the building. Also called Ground Lease.

Answer 16

Land Lease

Question 17

An interest that gives the holder, the tenant, a temporary right to exclusive possession of the estate, without title.

Answer 17

Leasehold Estate

Question 18

The effect borrowed funds have on investment returns.

Answer 18

Leverage

Question 19

The difference between rentable square footage and usable square footage.

Answer 19

Loss factor

Question 20

Lease for which tenants pay all taxes, insurance, etc., plus utilities and rent.

Answer 20

Net Lease

Question 21

An additional operating cost that is passed from a property owner to a tenant, such as when property taxes go up.

Answer 21

Pass-Through

Question 22

Lease under which a tenant pays a percentage of gross sales in addition to rent.

Answer 22

Percentage Lease

Question 23

Ties the rent escalation to the wages of the building’s cleaning and building maintenance personnel (called “porters”). The formula provides tenant’s rent will increase a specific amount per square foot for a specified increase in the porter’s hourly wages.

Answer 23

Porter’s Wage Escalation Formula

Question 24

An interest in property that entitles the holder to possess and occupy the property, now or in the future; an estate, which may be either a freehold or leasehold.

Answer 24

Possessory Interest

Question 25

This fees are typically paid when a licensee is working with a tenant representative and is paid a fee for finding space for the tenant. ________ fees are often fixed fees but could be percentage based.

Answer 25

Procurement Fee

Question 26

An income statement where certain amounts are hypothetical, such as the anticipation of lease income under certain circumstances or if certain events occur.

Answer 26

Pro Forma

Question 27

The equitable distribution of expenses among tenants for the operating expenses of a building, generally based on the percentage of the property occupied by the tenant.

Answer 27

Pro-Rata Share

Question 28

The “useable” square feet plus a pro-rata portion of the common areas shared among all of the tenants such as corridors, lobbies, and restrooms. This is the number typically used for calculating base rent. Also called Gross Square Feet.

Answer 28

Rentable Square Feet

Question 29

When a tenant transfers only part of his or her right of possession or other interest in leased property to another person for part of the remaining lease term (as opposed to an assignment, where the tenant gives up possession for the entire remainder of the lease term). Compare: Assignment

Answer 29

Sublease

Question 30

A contract clause that gives a mortgage recorded at a later date the right to take priority over an earlier recorded mortgage or existing lease.

Answer 30

Subordination Clause

Question 31

A lease in which the tenant pays all the expenses associated with the property (property tax, insurance, maintenance) in addition to rent. Also called Net-Net-Net.

Answer 31

Triple Net Lease

Question 32

The space actually available and useable for a tenant’s personnel, furniture, and equipment. The actual floor space inside the exterior walls of leased premises. Space the tenant can physically use inclusive of interior walls and columns. Also called Net Square Feet.

Answer 32

Useable Square Feet

Question 33

Fair housing protected classes:

Friends car- FRNDS CR minus vowels

Answer 33

Federal Protected Classes
 Familial status
 Race
 National origin
 Disability
 Sex

 Color
 Religion

Question 34

Fair housing additional NY State protected classes:

MAMS

Answer 34

Marital (status)
Age
Military (status)
Sexual (Orientation)

Question 35

Fair housing New York City additional protected classes:

CALP

Answer 35

Citizenship
Alien (status)
Lawful (income)
Partnerships (status)

Question 36

Commercial real estate also referred to as investment real estate types:

Answer 36

 Residential (single-family, multi-family, large multi-family)
 Office buildings
 Retail
 Industrial
 Mixed use
 Unimproved land