Commercial Real Estate Lease Glossary

Financial Clauses

• Rent Escalation Clause— Predetermined increases in base rent over the lease term. Covers fixed, CPI-linked, percentage, and stepped structures.
• CAM Charges (Common Area Maintenance)— Tenant contributions to shared property operating costs. Covers calculation methods, caps, reconciliation, and gross-up provisions.
• Expense Stop Clause— The threshold above which tenants pay operating expense increases. Covers base year stops, fixed dollar stops, and component stops.
• Tenant Improvement Allowance— Landlord financial contributions toward space customization. Covers typical TIA ranges by property type and disbursement methods.
• Percentage Rent Clause— Additional rent based on tenant gross sales exceeding a breakpoint. Common in retail leases.
• Base Rent Clause— The fundamental rent obligation, including calculation methods and abatement provisions.
• Security Deposit Provisions— Financial assurance requirements, letter of credit alternatives, and burn-down schedules.
• Operating Expense Clause— Definitions and allocations of building operating costs between landlord and tenant.

Lease Structures

• Triple Net Lease (NNN)— Tenants pay base rent plus property taxes, insurance, and CAM. Covers the full net lease spectrum.
• Modified Gross LeaseComing soon— Hybrid structure combining elements of gross and net leases.
• Ground LeaseComing soon— Long-term lease of land only, with tenant-owned improvements.

Occupancy & Use Clauses

• Co-Tenancy Clause— Provisions conditioning a tenant's obligations on the presence of other tenants or minimum occupancy levels.
• Exclusive Use Clause— Restrictions preventing the landlord from leasing to competing businesses. Covers broad vs. narrow exclusives.
• Permitted Use Clause— Specifying allowed business activities within the leased premises.
• Operating CovenantComing soon— Requirements that tenants continuously operate their business during the lease term.

Transfer & Assignment Clauses

• Assignment and Subletting Clause— Rules for transferring lease interests, including consent requirements, recapture rights, and profit-sharing.

Term & Renewal Clauses

• Holdover Clause— Consequences when a tenant remains after lease expiration. Covers holdover rent rates and tenancy type.
• Renewal Option Clause— Tenant rights to extend the lease term, including notice requirements and rent determination methods.
• Early Termination Clause— Rights to end the lease before its scheduled expiration, including termination fees and conditions.
• Kick-Out Clause— Tenant termination rights triggered by underperformance metrics.

Expansion & Contraction Clauses

• Right of First Refusal (ROFR)— The right to match third-party offers for additional space, renewal terms, or property purchase.
• Expansion OptionComing soon— Rights to lease additional contiguous or nearby space at predetermined terms.
• Contraction OptionComing soon— Rights to reduce leased square footage during the lease term.

Risk Allocation Clauses

• Force Majeure Clause— Provisions excusing performance obligations due to extraordinary events outside party control.
• SNDA (Subordination, Non-Disturbance & Attornment)— Agreement defining rights among landlord, tenant, and lender — critical for lease continuity in financing events.