Real Estate 306 Exam 3 2025/2026 Exam
Questions and Correct Answers | New
1
Update
which existing leases must be considered more carefully when valuing? - 🧠
ANSWER ✔✔multi tenant office building existing leases must be
considered more carefully than apartment complexes.
what interest does owner (lessor)have? - 🧠 ANSWER ✔✔leased fee
interest
what interest does the tenant (lesee) have? - 🧠 ANSWER ✔✔leasehold
interest
essential elements of a lease? - 🧠 ANSWER ✔✔must be competent
parties, legal use, provide something of value.
-name of lessor and lessee.
-adequate description of premises
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
,- conveyance of premises
-starting time and length of arrangement and agreed rental rates.
2
use of the premises: - 🧠 ANSWER ✔✔commercial property leases usually
contain a clause that indicates how the property can be used
longer lease terms (reliability CF vs. Flexibility) - 🧠 ANSWER ✔✔shorter
term if you think lease rates will change or want to change tenant mix.
restrictions on alterations or improvements to property - 🧠 ANSWER
✔✔usually require prior consent of landlord, who owns the fixtures at end
of leases?
rental payments for longer leases - 🧠 ANSWER ✔✔flat rent, graduated rent,
indexed lease (CPI).
overage (percentage) rent - 🧠 ANSWER ✔✔tenant pays a rent based in
part on the rates of the tenant's business
Overage (Percentage) Rent - 🧠 ANSWER ✔✔♣ In many retail leases, total
rent is equal to base rent + overage/% rent
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
, (Base rent = $96,000 per year or $8,000 per month, 5% of gross sales
charged as percentage rent, sales threshold/breakpoint = $160,000 per
3
month, store produces $200,000 in gross sales in a month.
Total rent = Base Rent + Overage Rent
Total rent = $8,000 + .05($200,000-$160,000) = $10,000)
Negotiated Lease Provisions Often Include: - 🧠 ANSWER ✔✔♣Use of the
Premises
- commercial property leases usually contain a clause that indicates how
the property can be used.
♣Longer Lease Terms (Reliable CF vs. Flexibility)
- shorter if think lease rates will change or want to change tenant mix
♣Responsibility for maintenance of Space
♣Restrictions on alteration or improvements to property
- Usually require prior consent of landlord, who owns the fixtures at end of
lease?
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
Questions and Correct Answers | New
1
Update
which existing leases must be considered more carefully when valuing? - 🧠
ANSWER ✔✔multi tenant office building existing leases must be
considered more carefully than apartment complexes.
what interest does owner (lessor)have? - 🧠 ANSWER ✔✔leased fee
interest
what interest does the tenant (lesee) have? - 🧠 ANSWER ✔✔leasehold
interest
essential elements of a lease? - 🧠 ANSWER ✔✔must be competent
parties, legal use, provide something of value.
-name of lessor and lessee.
-adequate description of premises
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
,- conveyance of premises
-starting time and length of arrangement and agreed rental rates.
2
use of the premises: - 🧠 ANSWER ✔✔commercial property leases usually
contain a clause that indicates how the property can be used
longer lease terms (reliability CF vs. Flexibility) - 🧠 ANSWER ✔✔shorter
term if you think lease rates will change or want to change tenant mix.
restrictions on alterations or improvements to property - 🧠 ANSWER
✔✔usually require prior consent of landlord, who owns the fixtures at end
of leases?
rental payments for longer leases - 🧠 ANSWER ✔✔flat rent, graduated rent,
indexed lease (CPI).
overage (percentage) rent - 🧠 ANSWER ✔✔tenant pays a rent based in
part on the rates of the tenant's business
Overage (Percentage) Rent - 🧠 ANSWER ✔✔♣ In many retail leases, total
rent is equal to base rent + overage/% rent
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
, (Base rent = $96,000 per year or $8,000 per month, 5% of gross sales
charged as percentage rent, sales threshold/breakpoint = $160,000 per
3
month, store produces $200,000 in gross sales in a month.
Total rent = Base Rent + Overage Rent
Total rent = $8,000 + .05($200,000-$160,000) = $10,000)
Negotiated Lease Provisions Often Include: - 🧠 ANSWER ✔✔♣Use of the
Premises
- commercial property leases usually contain a clause that indicates how
the property can be used.
♣Longer Lease Terms (Reliable CF vs. Flexibility)
- shorter if think lease rates will change or want to change tenant mix
♣Responsibility for maintenance of Space
♣Restrictions on alteration or improvements to property
- Usually require prior consent of landlord, who owns the fixtures at end of
lease?
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
