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10 Commercial Real Estate Terms You Don't Have to Know

If you don't have a Denver tenant representative watching over your best interests then you should learn the following commercial real estate terms well before your next lease negotiation otherwise you will not get the best deal on your commerical real estate property.  If you are not a professional lease negotiator with years and years of experience then get to know the following terms well.  Otherwise use the professionals at ProTenant to save up to 20% on your next lease negotiation.  We represent you and not the landlord, so we have your best interests at hear.
Commercial Real Estate Terms:
1. Accord and Satisfaction.
The settlement of an obligation. An accord is an agreement by a creditor to accept something different from or less than what the creditor feels he or she is entitled to.
2. Broker.
An agent who brings together a buyer and a seller, or a landlord and a tenant, in a real estate transaction. All brokers must be licensed by the state in which they work. Most work on commission, and the landlord or seller usually pays the fee.
3. Concessions.
Benefits or discounts given by the seller or landlord of a property to help close a sale or lease. Common concessions include absorption of moving expenses, space remodeling or upgrades (also called “build-outs”), and reduced rent for the initial term of the lease.
The non performance of a duty or obligation that is part of a contract. The most common occurrence of default on the part of a buyer or lessee is nonpayment of money when due.
5. Escalation clause.
A clause in a lease that allows the landlord to increase rent in the future. Rent increases dictated under an escalation clause may be charged in various ways, including:
  • A fixed increase over a definite period
  • A cost-of-living increase tied to a government index, such as the tax rate
  • An increase directly related to increases in operating the property
6. Lease.
An agreement by which the owner of a property (the “lessor”) grants the right of possession to a tenant (the “lessee”) for a specific period of time (the “term”) for a predetermined amount of money (the “rent”). A “lease-hold estate” is the space occupied by the tenant. Common types of leases include:
  • A straight, or flat, lease, which stipulates that the same periodic payment (usually monthly) be made for the entire term of the lease.
  • A percentage lease, which uses a percentage of the net or gross sales to determine the monthly rent. This is most often used in retail properties and with a minimum base rent.
  • A net lease, which requires the tenant to pay maintenance, taxes, insurance and so on, along with a fixed rent. This is also called “net-net-net” or “triple net.”
7. Lien.
A legal claim filed against a property for payment of a debt or obligation. If a property owner fails to pay a creditor, for example, the creditor can place a lien on the property. A lien can halt the sale of a property.
8. Negotiation.
The transaction of business aimed at reaching a meeting of the minds among the parties; the act of bargaining. A real estate transaction illustrates the negotiation process: The first offer received for a property often is considered merely an intention to deal. Thereafter follows a series of counter-offers leading up to the consummation of the deal. Usually, however, negotiation takes place only if the broker’s efforts have proceeded to the point where the prospect is considered a likely buyer or tenant.
9. Sandwich lease.
A leasehold estate in which the sandwich party leases the property from the fee owner or another lessee and then sublets to the tenant in possession, thereby maintaining a middle, or “sandwich” position. The sandwich party is the lessee of one party and the lessor of another; thus he or she is neither the fee owner nor the end user of the property. It is a lease occupying a position within three or more leasehold interests in a property.
10. Sublease.
A lease given by a tenant for some or all of a rented property. For example, if a tenant rents 20,000 square feet but only ends up needing 10,000 square feet, they may want to sublet the extra space for some or all of the remaining term of the lease, providing they continue to occupy and pay rent for the property.

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