A lease is a contract between you and the landlord. Like any other contract, the terms of a lease can be negotiated. This glossary should assist you in understanding provisions commonly contained in commercial leases.

• Competition: Restricts landlord's right to lease nearby space to businesses similar to those of the tenant's. This clause is usually found in leases of retail space.

• Compliance with the federal Americans with Disabilities Act (ADA): States that the building complies with the ADA. This is important because both the tenant and the landlord are responsible for making the property accessible to disabled persons. The tenant should make sure that the landlord makes this warranty based on an ADA survey or an audit performed by an engineer or architect.

• Destruction or condemnation: States if the landlord is required to rebuild if the property is destroyed. This clause will specify whether the rent will be abated and whether or not the tenant can terminate the lease if the building is totally or partially destroyed. It will also specify the rights of the parties if the property is taken by eminent domain.

• Enforcement: Specifies how the agreement is to be enforced and who pays attorney fees. Many businesses negotiate a clause into leases requiring the parties to resolve any disputes through either mediation or arbitration.

• Escalation clause: Provides for increases in rent over a specified period of time. Most commercial leases contain escalation clauses. Ascertain how the increase is determined. Is it keyed to actual increases in the landlord's operating costs or to some outside index?

• Expansion: Gives the tenant the right to add adjacent space or to move into a larger vacant space in the building.

• Grace period: Allows the parties a period of time in which to comply with the terms of the lease. This clause may specify the period of time in which the tenant must correct or "cure" a default in the rent.

• Insurance and liability:Specifies who is responsible for casualty and liability insurance and the coverage required.
• Landlord and tenant (lessor and lessee): Identifies the parties by their full legal names, states of incorporation, and principal business addresses.