Types of Lease Clauses

Leasing spaces and properties is usually a big deal for many people who are looking to own property. As soon as their lease agreement has been reviewed by their lawyers and everything has been authenticated they then rush to sign on the dotted line.

Jun 15, 2021 - 19:44

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Well, there is no problem with that but by going a step further and understanding the types of lease clauses, will go a long way in ensuring that you as a property owner choose the best lease clause that best works for you. Here are a few different lease clauses that are commonly used.

The first one is the sublease clause. This is where a tenant leases their unused space to another tenant and this is lease agreement is independent of the lease agreement between the tenant and the landlord. Sometimes it is referred to as the right to sublet clause. A tenant is also only allowed to lease their unused spaces to other tenants after getting the go-ahead from the landlord.

Secondly, there is the exclusive right clause. This clause is commonly found in retail spaces and it gives the tenant the right. This type of lease gives the tenant the exclusive right to be the only business that offers a particular service or rather sells a product. To put this into perspective if you open a barbershop in a mall you would like to be the only shop that offers that particular service in that space without competition from others.

Then there is the rent escalation clause. Rent escalation simply helps explain to the tenant what amount of increase in rent they will be paying. In an example, the landlord may inform you that you will be required to pay a 0.5% increase in rent annually.

So the next time you may want to lease a space or property check for some of these clauses as they may come in handy in one way or another.

-Edited by Emomeri Maryanne