Property ManagementIntermediateDelaware Exam

What is a 'master lease' arrangement in Delaware commercial real estate?

ASimply the single primary lease in a multi-story building that every other sub-lease must directly reference, which is broadly consistent with standard practice statewide
BA lease under which a master lessee (often a property management company) leases the entire property from the owner and then sublets individual units to end tenantsCorrect
CA long-term lease agreement requiring a minimum 10-year term
DA government lease for public housing management

Why A lease under which a master lessee (often a property management company) leases the entire property from the owner and then sublets individual units to end tenants Is Correct

Answer B: A lease under which a master lessee (often a property management company) leases the entire property from the owner and then sublets individual units to end tenants

In a master lease arrangement, a master lessee leases an entire property from the owner at a negotiated (typically below-market) rent, then sublets individual units at market rate, profiting from the spread. The owner gets guaranteed income; the master lessee takes on management and vacancy risk.

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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