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Radius Restriction: In retail leases, a clause which prohibits a tenant from opening a similar or competing store within a defined area from the location of the leased premises. The intent of a radius restriction clause is to protect the sales of a tenant from the leased premises, and in many cases, the landlord has the right to include the sales from the similar or competing store with the sales from the leased premises in the calculation of percentage rent.
Recapture (Percentage Rent): Amounts payable by the tenant pursuant to a lease which may be offset against percentage rent due. Examples include the recapture of real estate or common area maintenance charges paid against percentage rent, or the recapture of tenant improvement dollars paid by the tenant against percentage rent.
Recapture (Sublease/Assignment): The right of a landlord to terminate the lease for space for which a tenant has presented notice of its intent to sublease and/or assign. If recaptured, the tenant no longer has any rights or obligations related to the space as of the recapture date. In some leases, the tenant has the option to rescind their notification of intent to sublease and/or assign if the landlord exercises their recapture right.
Reconciliation Billing: A billing to tenants for the difference between estimated payments made by the tenant for an item of rent (usually expense recoveries) and the actual payment due. Reconciliation billings are made to a tenant after the landlord has determined the actual amounts to be billed in accordance with the lease provisions.
Recovery Pool: Operating expenses of a property which may be passed through to tenants in accordance with the terms of their respective leases. Many leases will include a listing of specific expenses which may be included and which must be excluded from the pool.
Refurbishment: An allowance granted to a tenant subsequent to the commencement date of their lease to be used for the purpose of improving the leased premises. Refurbishment allowances are most often granted in long term leases, whereby the tenant may improve the appearance of the premises at a defined date during the lease term. In some instances the allowance is stipulated as a dollar amount or a dollar per square foot amount to be used at the discretion of the tenant; in other cases, the landlord will agree to provide certain improvements to the premises at their cost, such as repainting and re-carpeting.
Relocation Option: An option granted to a landlord to change the location of a tenant’s premises upon landlord’s provision of notification within a certain time period prior to the relocation date. In most cases, the landlord is responsible for all costs associated with relocating the tenant and improving the new premises. In addition, some leases provide restrictions as to the location in the building to which the tenant may be located, the layout of the relocation premises or the number of times during the lease term during which the landlord may exercise its option to relocate.
Remedies: The rights granted to the landlord or tenant within a lease which that party may exercise in the event of a default by the other party.
Renewal Option: The right of a tenant to extend the lease term for a specified period of time and at a pre-defined rental rate. In many instances, the rate is defined as a percent of market rent, and in others, the rate is a specified dollar amount or amount per square foot. An auto-renewal option is a form of renewal option whereby the lease term is extended automatically on the expiration date without any notification requirement.
Rent: A fixed, periodic payment made by a tenant of a property to the owner for possession and use, usually by prior agreement of the parties.
Restriction: A limitation placed upon the use of the leased premises. Lease documentation may impose use restrictions on both the landlord (restricts the landlord from leasing space to certain tenants) and the tenant (restricts the tenant from using the premises for certain purposes).
Right of First Offer: A right granted to the tenant to lease additional, pre-defined space when such space becomes ‘available for lease’ and before such space is offered on the open market. Typically, the landlord has the obligation to notify the tenant that the space is available for lease, and the tenant has a pre-defined period of time after receipt of such notice to either accept or reject the offer. Rent for space leased via a right of first offer is typically market rent.
Right of First Refusal: A right granted to the tenant to lease additional, pre-defined space after a bona-fide offer has been received from a third party for such space. Typically, the landlord has the obligation to notify the tenant of receipt of the bona-fide offer and the terms contained therein, and the tenant has a pre-defined period of time after receipt of such notice to either lease the space on the terms contained in the third party offer or to reject the space.