Assignment

A transfer or making over to another of the whole of any property, real or personal, or of any estate or right therein. To assign - to transfer or make over to another.Ê

Base Year

This is how the Landlord recaptures any increase in operating expenses in gross leases beyond the first year of the lease.

Broker

An intermediary between the lessee and lessor. The broker arranges a leasing transaction. The broker is usually paid some fee by the leasing company for its services.

Cam

Cam stands for common area maintenance. Common area maintenance charges are those that help maintain the common areas, such as water/sewer, trash, restroom upkeep, landscaping, parking lots, fire sprinklers, roof or anything that all tenants share.

Certificate of Acceptance

A written verification by the lessee that they have received the property to be leased. Most leases begin after the date stated on the certificate of acceptance.

Common Area Maintenance

See Cam

Coterminous

Two or more leases that end at the same time.

Credit Grade
A measure of the credit worthiness of a person or business. There are several ways to report credit scores: by a letter of an alphabet (e.g. A, B, C or P, S, T) or by a number (e.g. Empirica 620). The customer's credit grade is normally an important part of the decision whether or not the leasing company will lease and may determine which rate factor (see below) is used in computing the lease payment.

Default

If a lessee does not comply with the terms of the lease, a default occurs. Generally, after a default, the lessor can exercise all of its rights under the lease to repossess the property and seek money damages.

Due Diligence

Research and physical inspection that is performed before any lease should be signed.

Fair Market Value

The technical definition of fair market value is the price a willing buyer will pay a willing seller for leased property on an "as is, where is" basis with both under no compulsion to either buy or sell. In reality, this is a vague term, often creating a question between a lessor and lessee regarding what is the fair market value. Stated another way, what will someone pay for the leased property at the end of a lease.

Financial Statements

Accounting statements that provide specific information about a companyâs financial position. They include the Profit & Loss Statement, also known as the Income Statement, the Balance Sheet, and the Statement of Cash Flows. Financial statements can generally be audited by an outside CPA firm or be unaudited and, thus, prepared by the company.

Financing Statement

This is a document specified under the Uniform Commercial Code, a law applicable in all states. This puts the world on notice that a security interest has been filed against the person on the form listed as the debtor.

Full Service Lease

A lease that includes base rent, and all operating expenses, including electric and janitorial expenses.

Gross Lease

Instead of being charged separately for property expenses as in NNN, these charges are included in the base rent.

Interim Rent

Rent paid for an interim period of time. Many leases begin at the start of a period such as the first of the month. If leased property is received and a certificate of acceptance is signed prior to that date, often there is an interim period between the acceptance and the start of the first lease rental. This period of time is called the interim term during which the interim rent is paid. The interim rent is generally calculated as a percent of the standard monthly rent prorated over the number of days in the month the lessee has use of the leased property.

Lease

A contract giving the lessee the right to use the leased property for a period of time.

Lease Term

The fixed term of the lease.

Lessee

The user of leased property under the lease.

Lessor

Depending on the type of lease, either the owner of the leased property or the owner of a security interest in the leased property.

Letter of Credit

A specific arrangement between a lessee and one of it's banks. The bank agrees in the event of a defined event, the lessor can look to the bank to make payment instead of the lessee. This is similar to a security deposit in that it is one way for a lessor to insure that it will be paid under a lease.

Master Lease

The primary document between the lessor and lessee containing all the general terms and conditions for leasing. Individual leases can then be relatively short and incorporate the master lease by reference. It is a very convenient administrative document so that once agreed, legal terms and conditions never need to be negotiated again.

NNN

The three N's of triple net represent the three major "net" costs, which are property taxes, insurance and maintenance.

Net Lease

Any lease where all costs in connection with the use of the leased property are paid by the lessee and are not part of the periodic lease payments. For instance, maintenance, insurance and taxes are paid directly by the lessee. Capital leases are generally net leases.

Personal Guarantee

The guarantee of someone to be individually responsible for the obligations under the lease. Generally for Subchapter S closely held companies and small businesses, a leasing company may ask for a personal guaranty as a way to insure that the lease payments will be made.

Pro Rata Share

Your percentage of the total square footage of entire property (building or park).

Purchase Option

Option to purchase leased property at the end of the lease term.

Refundable Security Deposit

An amount paid by a lessee to provide extra protection to the lessor to insure that the lessee will pay its obligations under the lease.

Remarketing

The process of selling or reÐleasing leased property which has been returned to the lessor either at the end of the term or as a result of a default in lease.

Remarketing Fee

A fee paid for selling or reÐleasing leased property.

Sublease

The lease agreement between a Sublessor and a Sublessee

Sublessor

The entity who is the original Lessee on the Master Lease and who is the responsible party until the expiration date of the Master Lease.

Sublessee

The entity who signs a sublease agreement with a Sublessor.

Subletting

The leasing of a premises, in whole or in part, by a third party.

Term

Generally leases run for 12, 24, 36, 48 or 60 months.

Triple Net

See NNN