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Lease Agreement Glossary

  1. Tenant: The person or party renting the commercial property.
  2. Landlord: The person or party owning the commercial property and renting it to the tenant.
  3. Lease: The legal contract between the landlord and tenant outlining the terms of the rental agreement.
  4. Rent: The amount of money paid by the tenant to the landlord for the use of the commercial property.
  5. Security Deposit: A sum of money paid by the tenant to the landlord at the beginning of the lease to cover any damages or unpaid rent at the end of the lease.
  6. Term: The length of time the lease agreement is in effect.
  7. Renewal: The option for the tenant to extend the lease agreement for an additional term.
  8. Default: The failure of the tenant to fulfill their obligations under the lease agreement.
  9. Eviction: The legal process by which a landlord may remove a tenant from the commercial property for a breach of the lease agreement.
  10. Subletting: The act of a tenant renting out the commercial property to a third party without the consent of the landlord.
  11. Quiet Enjoyment: The right of the tenant to peacefully use and occupy the commercial property without interference from the landlord.
  12. Common Area Maintenance (CAM): The cost of maintaining common areas of the commercial property, shared by tenants, which is usually added to the rent.
  13. Operating Expenses: The expenses incurred by the landlord in operating and maintaining the commercial property.
  14. Exclusive use clause: A clause in the lease agreement that grants the tenant exclusive use of a specific area or feature of the commercial property.
  15. Alterations: Any changes or improvements made to the commercial property by the tenant, which may require landlord's consent.
  16. Assignment: The transfer of the tenant's rights and obligations under the lease agreement to a third party.
  17. Subordination: A clause in the lease agreement that allows the tenant's lease to be subordinate to any future financing or mortgages taken by the landlord on the property.
  18. Indemnification: A clause in the lease agreement that requires the tenant to indemnify and hold the landlord harmless from any claims or losses arising from the tenant's use of the property.
  19. Exclusive rights clause: A clause in the lease agreement that grants the tenant exclusive rights to operate a specific type of business within the commercial property or a designated area.
  20. Insurance: A clause that obligates the tenant to carry insurance to cover losses to the tenant, the landlord or third parties arising from the tenant's use of the property.
  21. Triple Net Rent (NNN): A type of commercial lease where the tenant is responsible for paying a portion or all of the operating expenses in addition to the base rent.
  22. Gross Rent: A type of commercial lease where the landlord is responsible for paying all the operating expenses, in addition to the base rent.
  23. Force Majeure: A clause in the lease agreement which excuses non-performance of the contract by either party due to an unexpected event or circumstance that is beyond their control such as natural disaster, war, pandemics, strikes, etc.
  24. Gross Lettable Area (GLA): The total floor area of a commercial property that can be leased to tenants, including common areas such as lobbies, restrooms, elevators, and corridors.
  25. Guarantors: A person or party who guarantees the performance of the tenant's obligations under the lease agreement, usually a parent or relative of the tenant, or a company that the tenant is affiliated with.

17 Jan 2023
Author Loy de Jager
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