Leasing License Practice Exam

Which statement is true regarding tenant improvements made by a retail tenant?

1. They automatically become property of the landlord

2. They must be removed upon lease termination

3. They can stay if indicated in the lease

4. They require prior approval from zoning boards

The correct answer is: They can stay if indicated in the lease

The statement that tenant improvements can stay if indicated in the lease is accurate because the terms of the lease agreement typically dictate what happens to improvements made by the tenant. In many leasing scenarios, the lease outlines whether any enhancements or modifications made to the rented space will become part of the property and remain after the lease ends, or if the tenant has the right to remove them. If the lease specifies that the improvements will stay, both the landlord and tenant have agreed to this arrangement, and it provides legal clarity regarding the disposition of those improvements. The other options focus on different aspects. While certain improvements might automatically become the landlord's property under specific circumstances, this is not universally true unless outlined in the lease. Some tenant improvements indeed must be removed upon lease termination, particularly if there is no agreement in the lease allowing them to remain. Lastly, requiring prior approval from zoning boards is generally related to compliance with local laws and does not universally pertain to tenant improvements regarding lease agreements. The lease terms play a critical role in determining the fate of tenant improvements.