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Effective Date: The date on which a lease clause, typically an option, becomes operative.
Encumbered Space: Space in a building which is subject to a right or interest of a tenant.
Escalations: A lease clause which provides for an increase in rent at a specified future date(s). The most common types of escalations are (a) fixed increases in base rent; and (b) consumer price index adjustments.
Escrow Account: Is an account which holds money for a special purpose. In a case of Rent Withholding escrow accounts, the Bureau of Codes Enforcement of City Hall holds the rent money that the tenant pays until certain conditions, such as making the necessary repairs, are met.
Estoppel: Legally, the act of preventing (estopping) a party from claiming a different state of facts at a later date. When associated with leases, the statement of facts includes that the lease is in existence, that there are no defaults and that rent has been paid and is current as of a specified date. Estoppels are memorialized via an estoppel certificate, which is an agreement that may be relied upon by a third party such as a potential lender or purchaser. Leases often grant the landlord the right to obtain an estoppel certificate from a tenant; however, certain leases (often for larger tenants) also provide the tenant with the right to obtain an estoppel certificate from the landlord.
Eviction: The forced removal, by legal means of a tenant from the leased premise.
Exclusivity: The right granted to a tenant to be the only tenant in a property who may engage in a specified business use at that property.
Exculpation: The sheltering of a party from liability arising out of negligence. In leases, an exculpation clause operates to limit the liability of an owner or landlord from lawsuits by a tenant for breach of contract or nonperformance to the assets of the particular property in which the tenant is in occupancy. Exculpation clauses often limit the tenant from claiming rights to other properties owned by the landlord or personal liability of the landlord or any of its employees.
Expansion Option: An option granted to a tenant allowing the tenant to increase the amount of leased premises at a future date. In an expansion option, the expansion premises, notification date, effective date and rent are typically clearly defined. In addition, the right of the tenant to expand via such an option is not contingent upon the occurrence of any event related to the expansion premises (i.e., availability for lease, offer from third party). An auto-expansion option is a form of expansion option whereby the premises are expanded automatically on the effective date without any notification requirement.
Expense Recovery: A reimbursement by the tenant to the landlord for expenses of a property which are originally paid by the landlord. The mechanics for calculation of the Expense Recovery will depend upon whether the lease is a Gross Lease or a Net Lease. Also called a pass through.
Expense Stop: For gross leases, the amount which recoverable expenses must exceed before a tenant is required to begin paying expense recoveries. Stated differently, the expense stop is the amount of recoverable expenses which will be borne by the landlord before a tenant is required to pay their proportionate share of such expenses. The expense stop may be stated as an absolute dollar amount, a dollar amount per square foot or a base year (the recoverable expenses incurred in a defined calendar or fiscal year).
Expiration Date: The date upon which the landlord and tenant’s rights and obligations pursuant to a lease end.
Extension Option: An option granted to tenant allowing the tenant to lengthen the lease term at a pre-defined rental rate. The rate may be a specified dollar amount or may be quoted as a specified percentage of the market rental for the geographical market in which the property is located. An extension option must typically be exercised by the provision of notice from tenant to landlord within a pre-defined time period prior to the expiration of the lease term.