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escalation clause |
Also found in: Dictionary/thesaurus, Legal, Wikipedia, Hutchinson | 0.03 sec. |
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escalation clause A clause in any of a wide variety of contractual or real property arrangements that allows one party to increase the price upon the happening of certain specified events. Longterm leases often have rent increases at 3- to 5-year intervals, with the adjustment being a certain stated amount,a percentage of then-current market rents,or an increase based on some index with the first year of the lease representing the benchmark and against which the index is measured. Example: The parties agree that rent will increase in 5 years in the same proportion as the consumer price index (CPI) in 5 years bears to the current consumer price index. If the rent today is $4,000 per month and the CPI is 179, and in 5 years the CPI is 192, then the new rent is calculated at follows: 192 179 1.0726% $4,000 1.0726% $4,290.40 per month Other escalation clauses are used to increase the interest rate in a loan when there has been a default and to increase rent when a tenant remains in possession after expiration of its term. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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There has been more than one lease agreement which has had its escalation clause, or pro rata billing formula modified so as to conform to the inflexibility of a packaged program. Soon after, I became well acquainted with the concept of the escalation clause, the inspections waiver, the failed bid, and generally competing like gladiators for any property deemed livable and available. and in their contracts with oil companies the price escalation clauses are benchmarked to indexes that we [ucg] generate. |
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