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?A. Allowable Vacancy Rate ClauseB. Escalator ClauseC. Operating Costs Adjustment ClauseD. Periodic Tenancy Clause

Answer 1

B. Escalator Clause

Step-by-step explanation:

An escalation clause is a clause in a lease or contract that guarantees a change in the agreement price once a particular factor beyond control of either party affecting the value has been determined. An important example of this is a contract that adjusts for inflation.