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Landlord: One who owns an interest in real property and has leased such interest, or a portion thereof, to another party (the Tenant). Also called a 'Lessor'.

Landlord Supervision Fee: A fee which may be charged by the landlord or a representative thereof for supervision of repairs or alterations to a tenant's premises. Supervision fees are often specified as a percentage of the total cost of the repair or alteration work to be performed.

EXAMPLE: ABC Tenant's lease at Ellipsis Tower requires ABC to obtain Landlord's consent to perform any alterations to the premises greater than $5,000 after the commencement date and also requires ABC to pay a 10% Supervision Fee to Landlord for such alterations, regardless of whether Landlord or a contractor selected by ABC will be responsible for performing the alterations. ABC wishes to install a new shelving system in their premises which will cost $20,000. ABC must pay to Landlord a Supervision Fee of $2,000 in regards to such alterations.

Late Charge: A charge assessed against a tenant for failing to pay rent when due. A Late Charge is typically a one-time charge calculated as a specific dollar amount or a percentage of the amount due. In addition to or in lieu of a Late Charge, a lease may contain an interest provision, whereby the tenant is required to pay a specified interest rate on the amount due from the due date until the date paid.

EXAMPLE: ABC Tenant's lease allows the Landlord to charge a) a Late Charge equal to 5% of the amount due for any Rent unpaid for greater than 5 days from the due date; and b) Interest equal to the current Prime Rate plus 2% for any unpaid Rent from the date due until the date paid. ABC failed to pay it's Base Rent of $10,000 which was due on March 1st until March 21st. On the next rent invoice to ABC, the Landlord included a Late Charge of $500 for March rent and an Interest charge of $54.79, assuming a Prime Rate of 8% (calculated as $10,000 x 10% x 20/365).

Lease: An agreement whereby the owner of real property (i.e., the Landlord or Lessor) grants the right of possession to another party (i.e., the Tenant or Lessee) for a specified period of time (i.e., the Lease Term) and for a specified consideration (i.e., Rent). A Lease document outlines the rights and obligations of both the landlord and tenant in regards to the tenant's possession of the landlord's property.

Lease Buyout: Amount paid by landlord for Rent on the unexpired term of a tenant's lease in a building not owned by landlord. A Lease Buyout Allowance is either paid to the tenant or to the landlord of the non-owned building, and may be paid in one up-front installment or monthly for the remainder of the unexpired term.

EXAMPLE: ABC Tenant wishes to execute a ten-year lease for space at Ellipsis Tower. However, as of the projected commencement date of the Ellipsis Tower lease, ABC has an additional 6 months remaining on a lease in another building which the ABC will not longer be occupying upon commencement of the Ellipsis Tower lease. As an inducement to get ABC to execute the Ellipsis Tower lease, the Landlord agrees to a Lease Buyout, whereby the Landlord will pay the remaining 6 months of rent at the other building.

Leased Premises: Also called the 'Demised Premises', refers to the size and location of the premises to which the tenant has obtained possession pursuant to a Lease.

Leasing Commission: A fee paid to the leasing broker upon the successful execution of a lease agreement. In many cases, the broker's commission is calculated as a stated percentage of the negotiated Base Rent, with the percentage often determined by the geographical market in which the real estate is located. The calculation mechanics of a commission are often not included within a lease, but rather within a separate Commission Agreement or Brokerage Agreement entered into between the Broker and the landlord.

EXAMPLE: ABC Tenant hires MNO Brokerage, Inc. to negotiate its lease at Ellipsis Tower. MNO successfully negotiates a lease with the Landlord, and pursuant to a separate Commission Agreement, is entitled to a leasing commission equal to 5% of Base Rent for the initial 5-years of a lease term and 2.5% of Base Rent for any years in the term greater than 5 years. The lease with ABC is a 10-year lease requiring Base Rent payments of $100,000/year for years 1-5 and $150,000/year for years 6-10. MNO Brokerage would be entitled to a leasing commission equal to $43,750 [($100,000 x 5 x .05) + ($150,000 x 5 x .025)].

Lessee: One who has the temporary possession of real property owned by another (the 'Landlord'). Also called a 'Tenant'.

Lessor: One who owns an interest in real property and has leased such interest, or a portion thereof, to another party (the Tenant). Also called a 'Landlord'.

Letter of Credit: The agreement of a bank on behalf of a customer to honor drafts or other demands for payment upon compliance with the conditions of the letter of credit. As they relate to leases, tenants are often required to post letters of credit in lieu of or in addition to cash security deposits as security for the payment of rental obligations to the landlord.

EXAMPLE: As a condition to leasing space in Ellipsis Tower, ABC Tenant is required to provide a $100,000 letter of credit as security for lease obligations over the five-year lease term. The lease provides that the letter of credit may be for a one-year term, renewable annually with the issuing bank. During the third-year of the lease term, ABC defaults on the payment of its rental obligations in the amount of $55,000. The Landlord notifies the issuing bank and exercises its right to draw on the letter of credit to cover the $55,000 of lost rental.

Liability Insurance: Protection from claims arising from death, injury or damage to other people or property.

EXAMPLE: ABC Tenant's lease requires them to obtain Liability Insurance equal to $3,000,000 for death/occurrence, $3,000,000 for injury/occurrence and $1,000,000 for damage/occurrence. A visitor enters ABC's premises, slips and falls on a floor tile and sustains substantial bodily injury. The visitor sues ABC for negligence which resulted in the injury. Because ABC maintains Liability Insurance, their coverage is sufficient to pay the damages resulting from this occurrence.

Loss Factor: The percentage by which the gross area of a building is reduced to arrive at the useable area.

EXAMPLE: Ellipsis Tower has just been remeasured by an architectural firm. The remeasurement indicates that the building contains 520,000 rentable square feet and 450,000 useable square feet. The loss factor applied to the building is 13.46%.