Glossary of Terms

‍ADA Compliance: Standards mandated by the Americans with Disabilities Act that facilities

must meet to be accessible to individuals with disabilities.

Build-Out: The construction or customization of a rental space according to the tenant’sspecifications, often covered by tenant improvement allowances.

Break Clause: A provision allowing the tenant to terminate the lease early under specifiedconditions.

CAM Charges (Common Area Maintenance): Charges that tenants pay for the upkeep ofareas shared with other tenants, such as lobbies, restrooms, and parking lots.

Cap Rate (Capitalization Rate): A rate that helps in evaluating a real estate investment,calculated by dividing the net operating income by the property asset value.

Co-Tenancy Clause: A provision in a lease that allows tenants certain rights if key tenantsor a certain percentage of the plaza or building vacates.

Demising Walls: The partition walls that separate one tenant’s space from another or fromthe common areas.

Due Diligence: The comprehensive appraisal of a business or property by a prospectivebuyer or tenant to establish its assets and liabilities and evaluate its
commercial potential.

Escalation Clause: A clause in a lease that allows the landlord to increase rent at apredetermined rate and time to cover increased operational costs.

Exclusivity Clause: A lease provision granting the tenant the exclusive right to operate aparticular type of business within a property, preventing the landlord from leasingspace to competitors.

Force Majeure: A clause included in contracts to remove liability for natural andunavoidable catastrophes that interrupt the expected course of events and preventparticipants from fulfilling obligations.

Gross Lease: A lease where the landlord pays all property expenses, which are included inthe rent.

HIPAA: Health Insurance Portability and Accountability Act, U.S. legislation that providesdata privacy and security provisions for safeguarding medical information.

HVAC: Stands for heating, ventilation, and air conditioning; in leases, it’s crucial todetermine who is responsible for its maintenance and operation costs.

‍Letter of Intent (LOI): A document outlining the preliminary agreements between twoparties before a lease is finalized. It is not legally binding but signals the intent to moveforward in negotiations.

Market Rate: The average rent and lease conditions within a specific area for similarproperties.

Modified Gross Lease: A lease where the tenant pays rent including some propertyexpenses, with other costs paid separately.

NNN Lease (Triple Net Lease): Tenants pay all real estate taxes, building insurance, andmaintenance costs in addition to rent, often including CAM charges.

Right of First Refusal (ROFR): A clause giving a tenant the first chance to buy or leaseadditional space in a property before the owner can negotiate with other parties.

Subleasing: The act of leasing part or all of the leased property by the original tenant toanother tenant.

Tenant Improvement Allowances (TIAs): Funds provided by the landlord to customize orupgrade the leased space as per the tenant’s needs.

Zoning Laws: Regulations governing the use of land and the types of activities that can beaccommodated on a property, ensuring that the use is compatible with communitystandards