Question

XYZ Development, Inc. leases commercial space to businesses. Most of the leases are long-term, from five to fifteen years in length and have fixed rents. XYZ's contracts contain a clause in which both parties agree to annual adjustments of rent based on tax increases and other operating costs. If the previous year did not see more than a five percent increase in these costs, there is no change in the rent. What is the clause?

Answer 1

If the previous year did not see more than a five percent increase in these costs, there is no change in the rent, the clause will be the Escalator clause.

What is a clause?

It's a particularly precise clause in a legal agreement that refers to a key point of agreement between the contracting parties. A clause establishes the terms wherein the parties will conduct during the terms of the contract.

Terminology in a sales contract that raises your purchase price by a specific amount above competing offers till the offer reaches its maximum price you're ready to pay is called an escalation clause.

This will help to enhance the appeal of an offer, it also informs the seller of the exact amount you're willing to spend. This will also help to negotiate on price to make the deal close.

Therefore, the correct answer will be the Escalator clause.

Learn more about the clause, here:

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