Comparing leases on equivalent expense and use terms, which condition generally creates a positive rental advantage for the tenant?
Correct Answer
D) Contract rent is below current market rent
Below-market contract rent on equivalent expense and use terms creates a tenant rental advantage during the relevant enforceable term. Remaining duration, risks and other lease rights affect its present value. Landlord expense payment alone does not establish an advantage if the comparison terms differ, and below-market rent alone is not a universal formula for total market value of the leasehold.
Why This Is the Correct Answer
Below-market contract rent on equivalent expense and use terms creates a tenant rental advantage during the relevant enforceable term. Remaining duration, risks and other lease rights affect its present value. Landlord expense payment alone does not establish an advantage if the comparison terms differ, and below-market rent alone is not a universal formula for total market value of the leasehold.
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