📖 Reference
Commercial Lease Glossary
The clauses and concepts that decide whether a lease abstract is right — defined in plain language, with worked examples and the traps our abstraction specialists check for on every document.
Accelerated rent
Accelerated rent is a landlord remedy triggered by tenant default: the lease lets the landlord demand the rent owed for the remaining term, …
Alterations clause
An alterations clause sets out what a tenant may change inside leased premises, what needs landlord consent versus simple notice, who pays f…
Auto-renewal clause (evergreen)
An auto-renewal (evergreen) clause renews the lease term for successive periods unless one party affirmatively gives notice of non-renewal b…
Base rent
Base rent is the fixed periodic amount — usually stated monthly or annually per square foot — that a tenant pays a landlord for the right to…
Base year (operating expenses)
The base year method fixes a reference year of operating expense spend, and the tenant reimburses only its pro-rata share of increases above…
CAM cap
A CAM cap is a negotiated limit on how far controllable common area maintenance expenses can rise in a year. The cap covers costs the landlo…
CAM charges
CAM charges are the fees a commercial tenant pays toward maintaining the shared parts of a property — lobbies, restrooms, parking lots, hall…
CAM gross-up
A CAM gross-up clause lets a landlord scale variable common area maintenance costs up to a stipulated occupancy level — commonly 95% — befor…
CAM reconciliation
CAM reconciliation is the annual true-up between the estimated common area maintenance (CAM) charges a tenant paid during the year and the t…
Casualty clause
A casualty clause is the lease provision that sets out what happens if the premises (or the building) are damaged or destroyed by fire, stor…
Co-tenancy clause
A co-tenancy clause is a retail lease provision that ties a tenant's rent obligation to the continued presence of other tenants at the shopp…
Commercial security deposit
A commercial security deposit is money or a letter of credit a tenant provides to secure its performance under a lease, which the landlord c…
Condemnation clause
A condemnation clause is a lease provision that governs the parties' rights if all or part of the leased property is taken by a governmental…
Contraction rights (lease contraction)
A contraction right (or contraction option) is a negotiated tenant right to give back a portion of the leased premises on one or more stated…
Covenant of quiet enjoyment
The covenant of quiet enjoyment is the tenant's right to undisturbed possession of leased premises. It can be implied by law or written expr…
CPI escalation clause
A CPI escalation clause ties rent increases to a named consumer price index rather than a fixed percentage, usually inside a collar that flo…
Demised premises
The demised premises are the specific space a lease grants ("demises") to the tenant — typically defined by suite number, a floor-plan exhib…
Demolition clause
A demolition clause is a lease provision that gives the landlord the unilateral right to terminate the lease — without any tenant default — …
Early termination clause
An early termination clause is a negotiated lease provision allowing one party — usually the tenant — to end the lease before its scheduled …
Estoppel certificate
An estoppel certificate is a signed statement in which a tenant confirms the current facts of its lease — the rent being paid, the lease ter…
Exclusive use clause
An exclusive use clause bars the landlord from leasing other space to competing uses, protecting a retail tenant against cannibalization ins…
Expansion rights
An expansion right is a negotiated option under which a tenant may lease additional, specified space in the same building or project on term…
Force majeure clause
A force majeure clause is a contractual risk allocation: when a defined category of events outside a party’s reasonable control prevents or …
Go-dark clause
A go-dark clause is a lease provision that deals with a tenant ceasing retail operations at the premises while remaining liable under the le…
Gross lease
A gross lease is a commercial lease in which the tenant pays one flat rent figure and the landlord pays the property's operating costs — rea…
Ground lease
A ground lease conveys land rather than a finished building. The tenant typically constructs and owns the improvements during a very long te…
Holdover rent
Holdover rent is the increased rent a commercial tenant must pay when it remains in the premises after the lease term expires without a rene…
Holdover tenancy
A holdover tenancy arises when a tenant remains in the premises after the lease term expires without having exercised a renewal or signed an…
Kick-out clause
A kick-out clause is a lease provision that lets a tenant terminate early if a defined performance condition is not met — most commonly, gro…
Lease administration
Lease administration is the ongoing management of an active lease portfolio: tracking critical dates and option windows, generating rent and…
Lease audit
A lease audit is a tenant's review of the landlord's operating expense statements, CAM reconciliations, and rent calculations to verify that…
Lease default and remedies
Lease default and remedies provisions define what counts as a breach - monetary or non-monetary - how much notice and time to cure each side…
License agreement (vs lease)
A license agreement grants permission to use space without the exclusive possession that defines a lease. Coworking desks, serviced offices,…
Modified gross lease
A modified gross lease is a hybrid: the landlord pays a defined basket of operating expenses up to the level those costs ran in a named base…
Most Favored Nation (MFN) clause
A Most Favored Nation clause gives a commercial tenant the right to pricing and terms at least as favorable as those granted to other simila…
Operating expense pass-through
An operating expense pass-through is a lease provision under which the landlord bills tenants for some or all of the property's operating co…
Operating expense stop
An operating expense stop (or "expense stop") is a dollar amount, typically stated per square foot, that caps the operating expenses a landl…
Percentage rent
Percentage rent is additional rent a retail tenant pays on top of (or sometimes instead of) fixed minimum rent, calculated as a stated perce…
Personal guaranty
A personal guaranty in a commercial lease is a separate contract in which an individual — typically an owner, principal, or affiliate of the…
Pro rata share
Pro rata share is the percentage of a building's shared costs that a single tenant pays, calculated as the tenant's leased rentable square f…
Radius restriction (radius clause)
A radius restriction — also called a radius clause — is a tenant covenant not to own, operate, or have a financial interest in a competing b…
Recapture clause
A recapture clause is a lease provision that gives the landlord the right to terminate the lease and reclaim the premises when a defined tri…
Relocation clause
A relocation clause is a lease provision that gives the landlord the right to move the tenant out of its current premises into substitute sp…
Renewal option
A renewal option is a lease provision that gives the tenant the right, but not the obligation, to extend the lease term for one or more addi…
Rent abatement
Rent abatement is a temporary suspension or reduction of a tenant's rent obligation, granted either as a fixed concession period at the star…
Rent commencement date
The rent commencement date is when the tenant's base rent obligation starts. It often trails lease commencement because landlord work, tenan…
Rent escalation
Rent escalation is the pre-agreed schedule of increases to a lease's base rent over the term, built into the lease so the rent rises automat…
Rentable vs usable square feet
Usable square feet (USF) is the area a tenant actually occupies inside its own suite; rentable square feet (RSF) is that same space plus the…
Right of first refusal (ROFR) and right of first offer (ROFO)
A right of first refusal (ROFR) and a right of first offer (ROFO) are priority rights: either one gives its holder — usually a tenant — a sh…
SNDA
An SNDA is a three-part agreement among a tenant, a landlord, and the landlord's mortgage lender. Subordination puts the lease behind the mo…
Sublease and assignment
A sublease and an assignment are the two ways a tenant hands lease space to someone else, and the law draws the line by what the original te…
Tenant improvement allowance
A tenant improvement allowance — often shortened to TI allowance or T.I. allowance — is a sum a landlord agrees to contribute toward the cos…
Triple net lease
A triple net lease (NNN) is a commercial lease structure in which the tenant pays base rent plus its pro-rata share of the three operating "…
Use clause
A use clause is the lease provision that defines what business activity a tenant is permitted to conduct in the premises — narrowly ("a Star…
