Does it ever sound like real estate professionals are speaking a foreign language? Here is a list of seven real estate terms to help you navigate through your next lease.
- Letter of Intent: Also known as a LOI, a letter of intent spells out basic terms and conditions of the transaction that will later be used as the guideline to draft the lease or sales contract. These are non-binding. I like these!
- Rent Escalations: Rent escalations are annual increases in the Lease that are intended to keep pace with inflation.
- Triple Net Leases: Triple net leases do not include expenses such as taxes, property insurance and common area maintenance. These are a separate charge and passed on to the Tenant.
- Rentable vs. Usable Square Footage: Rentable square footage is the amount of space you pay for and includes a pro-rata share of common areas such as hallways and bathrooms. Usable square footage is the amount of space you actually use.
- Tenant Improvements: When you lease a space, the Landlord usually will give an allowance for improvements to modify the space for your specific business requirements such as new paint and carpet, moving walls, renovating restrooms etc.
- Option to Renew: An option to renew your lease allows you to stay in your space for an additional term after the lease expires, if you give notice by a certain negotiated time period.
- Assignment and Subletting: If your rental space no longer fits your needs you will be able to move out early if your leases provides the right to assign or sublet your space. You generally are required to remain liable for the remaining term but another business can move in and make the lease payments.