California Real Estate Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Master the California Real Estate Exam with our comprehensive practice quiz. Get expert tips, detailed content review, and insider strategies to pass on your first try.

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

What does an escalator clause relate to?

Rental rate adjustments based on an index
Changes in property management fees
Adjustments to the length of a lease term
Annual increases in property taxes

The correct answer is: Rental rate adjustments based on an index

An escalator clause is a provision in a lease or contract that allows for adjustments in rental rates, usually linked to specific indexes or factors. This clause is particularly useful in long-term leases where the landlord and tenant want to ensure that the rental rates remain fair and in line with economic conditions over time. For example, the rental rate might be adjusted annually based on a recognized cost-of-living index or inflation rate, allowing the landlord to increase rent periodically in a way that is predictable and transparent to the tenant. The other options do not accurately reflect the specific purpose of an escalator clause. Changes related to property management fees, adjustments to lease terms, or tax increases are not the focus of this clause, which specifically addresses rental rate adjustments tied to certain indices.