The lease term is the absolute length of the agreement. There is a very definite commencement and at term expiration the lease is terminated.
Simple but important!
Not much else works without this concept.
There are two:
- Lease Commencement, usually but not always determines the term beginning and must be purposely and clearly set. If unclear, there may be other important lease performance dates that calculate from this milestone.
- Lease Expiration. Most commercial leases contain specific language to temporarily extend the term, applicable to a range of unusual circumstances needed by a tenant unable to renew or move. Tenants may expect severe financial penalties for holding over and can expect double rent and a limited extended occupancy period. The holdover will impact any availability to a new tenant/occupant, and cause the landlord and new tenant serious problems with equally serious financial repercussions.
The tenant’s right to possess the premises are finite.
This is a powerful area in which the tenant may want to increase or decrease the term to meet a business objective, or increase the term to encourage the landlord to give the tenant something, maybe more landlord paid TI to sweeten the deal.