Property OwnershipIntermediateArizona Exam

A 'sandwich lease' in Arizona refers to:

AA lease covering both the commercial and residential portions of a mixed-use building, with separate rent obligations and term lengths for each component

BA lease in which annual rent escalations accumulate while the landlord's operating expense reimbursements are fixed, widening the net income spread over timeCorrect

CA leasehold interest where the original tenant subleases to a subtenant, with the original tenant paying rent to the landlord and receiving more rent from the subtenant

DA master lease under which an investor controls multiple units and subleases each individually at short-term market rates, capturing the spread as profit

Why A lease in which annual rent escalations accumulate while the landlord's operating expense reimbursements are fixed, widening the net income spread over time Is Correct

Answer B: A lease in which annual rent escalations accumulate while the landlord's operating expense reimbursements are fixed, widening the net income spread over time

A sandwich lease creates a 'sandwiched' middle position: the original tenant (sandwich leaseholder) is bound to pay rent to the landlord while collecting higher rent from their subtenant, profiting from the spread.

Exam Tip: Property Ownership

Property ownership questions test the bundle of rights and different forms of ownership. Know the differences between joint tenancy, tenancy in common, and community property, including the right of survivorship.