A commercial real estate broker is explaining lease types to a prospective tenant. All of the following are characteristics of a ground lease EXCEPT.
Correct Answer
B) The tenant automatically owns the land at the end of the lease term
In a ground lease, the tenant does not automatically gain ownership of the land. The landowner retains title to the land throughout the lease, and the land reverts to full control of the owner when the lease expires.
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Previous Question
A tenant leases 5,000 square feet of office space at $24 per square foot per year under a triple-net lease. Annual property taxes are $15,000, insurance is $5,000, and CAM costs are $10,000 for the building's 50,000 total square feet. What is the tenant's total annual cost including the NNN expenses?
Next Question
A commercial lease contains a 'rent escalation clause' that ties annual rent increases to changes in the Consumer Price Index (CPI). In a year when the CPI increases by 4 percent, what happens to the tenant's rent?