Property ManagementIntermediateDelaware Exam

What is a 'lease guaranty' in Delaware commercial real estate?

AThe landlord's guarantee of the tenant's business success

BA personal guaranty by the tenant's principals or a third party that lease obligations will be fulfilled if the tenant defaultsCorrect

CSimply a narrow government program that guarantees commercial lease obligations only for qualifying small businesses, in general

DA guarantee from the broker that the tenant will perform

Why A personal guaranty by the tenant's principals or a third party that lease obligations will be fulfilled if the tenant defaults Is Correct

Answer B: A personal guaranty by the tenant's principals or a third party that lease obligations will be fulfilled if the tenant defaults

A lease guaranty is a personal guarantee from the tenant's owners, parents, or a creditworthy third party to fulfill the tenant's lease obligations if the tenant defaults. Lenders often require guarantees when the tenant entity has limited credit history.

Exam Tip: Property Management

Property management questions cover landlord-tenant law, security deposits, and maintenance responsibilities. Know the differences between gross, net, and percentage leases.

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Key Terms to Know

Right of First Refusal

A contractual right giving a party the opportunity to match any offer received before the owner can accept it from a third party.

Earnest Money

A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.

Contingency

A condition in a purchase contract that must be satisfied before the sale can proceed to closing.

Purchase Agreement

A legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.

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