What clause allows Maxine's lease to fluctuate based on the consumer price index?

Prepare for the Texas Real Estate Appraisal Exam. Test your knowledge with flashcards and multiple choice questions, all with hints and explanations. Pass with confidence!

The correct choice regarding the clause that allows Maxine's lease to fluctuate based on the consumer price index is the escalator clause. This clause is specifically designed to adjust rental payments in response to increases in costs, often tied to an index, such as the consumer price index (CPI).

An escalator clause provides a mechanism for landlords to maintain the real value of rental income over time, reflecting inflation or changes in market conditions. By linking the lease payments to the CPI, it ensures that the rent can increase, thus providing protection to the landlord against inflation, which can erode the purchasing power of fixed rental payments.

Other clauses may address different aspects of a lease, but they do not typically provide for adjustments based on economic indicators like the CPI. For example, an expense stop clause generally defines the point at which the landlord's responsibility for property expenses ends and the tenant’s begins, while a rental index clause—though somewhat similar in name—is not a widely recognized term in real estate practice. A variable clause might suggest changes based on various factors but lacks the specificity offered by an escalator clause related to an index such as the CPI.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy