Master Lease - A lease controlling subsequent leases. May cover more property than subsequent leases. For example: "A" leases an office building, containing ten offices, to "B". "B" subsequently subleases the ten offices individually. The ten subleases from "B" as sublessor are controlled by the lease from "A" to "B" (master lease).
Mechanic's lien - A claim provided for under state statutes securing the priority of payment for the value of work and materials furnished in the construction or repair of real property.
Month-to-month - A lease for a specific period of time, usually one month, which automatically renews itself for the same period of time, unless landlord or tenant provide notice to terminate.
Moving allowance - A specified dollar amount paid by the owner to cover, expenses. Also known as owner’s moving expense.
Moving expenses - The cost incurred by the tenant to move into the new space. The landlord may pay a portion or all, depending on what is negotiated in the lease. Also see moving allowance.
NNN - See “triple-net” and “net lease” below.
Net Lease - (See also "Triple Net"). Today this generally indicates a lease in which the stated rent excludes the insurance, utilities, operating expenses and real estate taxes for the building. The tenant is then responsible for the payment of these costs either directly or as additional rent. Opposite of Gross or Fully Serviced Lease.
Net Present Value (NPV) - The calculation of NPV takes into account both the netting of cost and benefits and the time value of money. See Present Value.
Net Rentable Area - (Same as Rentable Area). The area (square footage) for which rent can be charged. Generally it is the gross area of the full floor less the area of all vertical penetrations (elevator shafts, stairwells, mechanical shafts etc.) Rentable area can be measured in many ways, but the most common measurement for office buildings is according to BOMA standards. Net Rentable area includes the tenant's premises plus an allocation of the common area directly benefiting the tenant, such as restrooms, common corridors, mechanical and janitor's rooms and the elevator lobby on the tenant's floor.
Non-disturbance - So long as lease is not in default, its rights to occupancy under the lease will not be disturbed by the lessor or it's successors or assigns.
Notice of commencement - Legal notice to the county's register of deeds that remodeling/improvements will be undertaken at an address. See also “Certificate of Substantial Completion” and “Certificate of Occupancy”
Notice of furnishing - Legal notice by a subcontractor or supplier that it furnished labor or materials, subsequent to the notice of commencement, thereby establishing the legal right to be paid for the services rendered.
Occupancy Cost - Any cost or charge incurred by a tenant pursuant to its lease, such as rent, operating expense increases, parking charges, moving expenses, remodeling costs, etc.
Occupancy Date - Unless specifically stated otherwise in the lease, it is the date on which the tenant takes possession of its leased premises. (See also "Commencement Date").
Open Listing - Any property that is leased directly by the owner. Sometimes, the owner will employ an in-house leasing agent. Typically, these are called open listings, where the owner will pay a full commission to any broker who brings a tenant to the property.
Operating Expenses - The cost of operating an office building, such as janitorial, management fees, utilities, and similar day to day expenses, as well as taxes, insurance, and a reserve for replacement of items which periodically wear out. Should not include capital expenses such as roof replacement nor expenses associated with the production of income such as leasing commissions and legal fees.
Option - A term in a lease for the rights either tenant or landlord may have with respect to one another, usually with stipulations regarding timing of those rights.
Owner's Representative - An agent who is an advocate for the owner and/or landlord.
Partition wall - A wall constructed to create work areas such as offices or conference rooms. Depending on security needs, a partition wall may not be constructed to the roof or floor decking, but may terminate at lower point such as a suspended ceiling.
Pass-Throughs - An increase in operating expenses over the base year amount that is billed to the tenant as additional rent. See escalation.
Percentage rent - Provides for a rent to be paid as a percentage of retail sales, usually quarterly or annually. Often coupled with a base rent.
Premises - The description of the leasehold and the specific square footage for which the parties enter into a lease. Typically the entire rentable area leased by lessee. Sometimes used to designate solely the useable area leased by lessee, i.e. that for which the lessee has exclusive occupancy as opposed to the common areas.
Present Value - The present value is the amount that must be invested now to produce the known future value. For any sum invested at a given interest rate, the amount one would receive at the end of the period can be determined by taking the investment times one (1) plus the interest rate of the period to the power of the period. For example, if $10 is invested in an interest rate of 10% for one year, the investment would grow to $11 at the end of the year. It follows, then, that $11 one year from now is worth $10 today; that is $10 is the present value of $11.
Pro-Rata Share - Percentage of building occupied by the tenant, which is usually based on the rentable or leasable square footage measurement of your space compared to the rentable or leaseable square footage of the building.
Punch list - A list of incomplete or unacceptable construction items which upon remedy and completion will usually complete the obligations of the contractor under a construction contract. Typically the Certificate of Substantial Completion will attached to it those incidental “punchlist” items which may be performed without delaying the Certificate of Occupancy.
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