Glossary of terms
Please refer to the Glossary of Terms below to clarify specific property terminology.
An interest in land that is not limited by time. The owner of a freehold generally owns the land itself and any buildings/structures on it.
A time-limited interest in land, although leasehold interests can be virtually perpetual (long leases can be granted for 999 years). Generally, commercial property on business parks can be held on a leasehold basis.
Heads of Terms
Identifies and highlights the requirements of both the transacting parties in a property deal. Its advantage is that both parties will fully understand what they are subject to, and reduce or abolish any misunderstandings from each party. The heads of terms will form the basis of the contract and be forwarded to the parties’ solicitors to draft the contract or lease.
A payment that is used to encourage a tenant to take on a new leasehold contract when a lease is granted or assigned. A common example is where a landlord pays a tenant a sum of money to contribute to the cost of a tenant’s fit-out or allows a rent free period.
An assignment of a lease is where the tenant transfers/sells its entire interest in the property for the unexpired term of the lease to an assignee.
A break clause (alternatively called a ‘break option’ or ‘option to determine’) is a clause in a lease which provides the landlord or tenant with a right to terminate the lease before its contractual expiry date, if certain criteria are met.
The extent of the premises included within a lease and may include land or other facilities. For example, when an office block is let under a written lease, in the lease the office block might be referred to as the demised premises.
The rent paid under a lease after the end of any rent free or reduced rent periods. It is an artificially inflated rent which ignores the rent free period or any other concessions.
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