When talking about commercial leases, two dates that will be extremely important to you whether you are the Lessor (Landlord) or the Tenant (Lessee) are the Lease Commencement Date and the Rent Commencement Date.
The Lease Commencement Date is the date in which the lease goes into effect legally binding the parties the parties to the terms of the lease.
The Rent Commencement Date is the date in which the Lessee begins to pay rent to the Lessor.
In many cases these dates may be the same and as a Lessee you will pay your first lease payment at the time in which you sign the lease. However, these two dates can be different.
In one instance, this can occur when there needs to be done work to the space for the new Tenant. Perhaps some offices need to be built out, or the space needs fresh carpets and paint. Nowadays, Landlords may also be willing to offer an incentive to bring a viable Tenant into their building by offering a rent-free period for three months or so.
The Rent Commencement Date may be either a fixed date or a floating date. If you are the Tenant, you may want to push for a floating date especially if the Landlord is responsible for performing the work on the space to get it move in ready. If there is a delay in the work getting completed on time, you may be responsible for paying rent before you can actually move in.
When negotiating the terms of your lease whether you are the Landlord or the Tenant, be sure to use an attorney for legal terms and advice!
Please don't hesitate to send me your additional thoughts.
Be well,
Rhonda
Wednesday, October 7, 2009
- In: Commencement Date, Landlord, Lease Commencement, Lessee, Lessor, Rent Commencement, Tenant
- Posted By: Anonymous