Glossary of Commercial Real Estate Terms
A real estate broker or agent who works on behalf of a Landlord. Typically the Landlord-to-agent relationship is established by an exclusive listing agreement and is for a particular building or property. The term “Landlord representative” or “Landlord broker” is used to describe the relationship between the Landlord and the individual agent providing the service to the Landlord. Some organizations specialize in Landlord representation.
Describes a situation in which there is a minimum or limited amount of vacant office space available and many users are looking for office space. When this situation occurs, Landlords can raise rental rates and offer few, if any, concessions or allowances and still have little problem in leasing office space. See also Tenant’s Market.
Also known as a space plan or schematic created by a space planner/architect to show locations of the improvements and utilization of a space by a Tenant.
The ability of the usable area to meet a Tenant’s workflow requirements. Efficiency is usually dictated by the building shape, core location, floor size, corridors, etc.
A contract whereby an individual or entity grants occupancy or use of property to another individual or entity for a specified time period, rent payment, and other conditions.
A cash inducement offered by a Landlord or Tenant to cancel or terminate the remaining portion of a lease.
A paragraph or provision describing mutual agreement, business principles, performance criteria, or other arrangements, the sum of which make up a lease document.
The construction, fixtures, attachments, and any and all physical changes and additions made to leased premises whether made by the Tenant (with or without the Landlord’s permission) or on the Tenant’s behalf by the Landlord or a representative (e.g., subcontractor) of the Tenant.
The length of time a lease is in full force and effect. It is determined by a lease commencement date, lease expiration date, and/or the number of months or years the lease document shall be valid. If a lease commencement date changes from that originally specified in a lease (for example, if the Landlord is unable to complete office remodeling or construction), the time period specified by the lease term will remain the same starting on the new lease commencement date.
Any period of 12 consecutive months, starting from the first day of a month. The first day is either the lease commencement date or the first day of the month immediately following the lease commencement date.
The term for individuals who specialize in leasing commercial real estate including office, retail and industrial space. A leasing agent must work for a principal broker and be licenses. The general license for all real estate individuals is the salesperson’s license. Because this individual acts on behalf of another to locate and negotiate for office space, the term “leasing broker” or just “broker” is synonymous with “leasing agent.” In this context the term “broker” is being used in the definitional rather than the legalistic sense.
The distance from a building’s exterior perimeter line to the public corridor.
The individual or entity paying rent for, utilizing, and/or taking possession of office space. Also known as the Tenant.
The individual or entity receiving the rent for and/or granting permission to use or take possession of office space. Also known as the Landlord.
Letter of Intent
A signed agreement by both Tenant and Landlord prior to the lease, and setting forth primary terms, conditions and considerations that are to form the basis of the lease. The letter of intent, as the basis for the lease document, is a show of good faith on the part of the Tenant and the Landlord. Both the Tenant and Landlord agree, for some stated period of time, that the Tenant will not continue to look for other office space and the Landlord will not attempt to lease the particular office space to another, and both will make a good-faith effort to reach agreement for the final lease document.
Letter of Representation
A written agreement between a Tenant and a broker stating that the broker (or his or her representatives) will be the only agents working on behalf of the Tenant to locate and negotiate for office space. The letter of representation provides credibility for both the Tenant and the broker in the marketplace and establishes a fiduciary relationship between the broker and the Tenant. This relationship is disclosed to each Landlord that might have office space to meet the Tenant’s needs.
Liability of Landlord Provision
A lease clause severely limiting the Landlord’s liability for use of the building and office space by Tenants, guests, employees, visitors, etc.
The right, by law, of an individual or entity to place a claim or hold on the property of another individual or entity in order to secure payment of a debt. Certain liens permit the taking and selling of the debtor’s property to satisfy the obligation to the creditor and/or payment of the debt. In other instances, a lien is registered against the property, and such lien must be satisfied before the property can be sold or transferred.
A partner who provides startup and operating funds but has no responsibilities for administration management and is legally responsible for the losses of the partnership only up to the amount of the investment.
The record of notice that a legal action or suit has been filed that will potentially affect the title of a particular piece of property. This document is attached to a property’s title and will usually prevent the property from being sold until a court action or suit is settled.
Same as Common Area Factor.
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