Q:

What is some common lease terminology?

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Quick Answer

Whether the lease is residential or commercial, two terms that apply to rental agreements are lessee and lessor or landlord and tenant. Another term, security deposit, also usually pertains to all types of leases. Commercial leases are generally more complicated and contain more real estate jargon, with terms such as "escalation clause," "non-compete clause" or "triple net rent."

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Full Answer

The parties in a lease agreement are divided into the lessee and lessor, also known as the tenant and landlord. In the agreement, both parties make certain commitments. One agreement the tenant usually makes is to put down a security deposit. This deposit is a monetary amount the tenant pays to guarantee he honors the lease. The landlord returns the security deposit minus the cost of any damages when the lease expires.

An escalation clause is part of the contract that allows the lessor to increase the rent if the expenses related to the property increase. Such expenses include property taxes.

A non-compete clause in a commercial contract assures the tenant that the landlord refuses to rent to any other businesses that compete with his. If the tenant rents space in a strip mall for a deli, for instance, no other deli is allowed in the building with the inclusion of such a clause.

If the parties agree on triple net rent, the tenant pays not only the rent but other building-related costs. These expenses include property taxes, insurance and building maintenance.

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