The Term clause generally sets forth the start and end of the lease. More complex Term clauses include language, either within the clause itself or as sub-clauses, covering possession before the start of the lease, delay in tendering possession, and even more complex clauses like options to extend and holdover.
The standard clause language is substantially consistent across leases, other than obvious differences such as the Commencement Date and the years in the term. However, clauses differ substantially in the number and types of additional terms or sub-clauses included in the clause. Additionally, a significant number of example documents combine the lease premises and term clauses (and sometimes additional clauses) into a singular clause.
Optional Additional Clause Element
Commencement Date Agreement. If required by Landlord, Tenant agrees to execute a Commencement Date Agreement to be prepared by Landlord to indicate the Commencement Date once the Commencement Date has been established.
Prior Possession. If Landlord gives possession prior to the Commencement Date, such occupancy shall be subject to all the terms and conditions of this Lease (except that, as long as Tenant is not conducting business therein, Tenant shall not be required to pay Annual Base Rent for the period prior to the Commencement Date).
Delay in Possession. If Landlord shall be unable to deliver possession of the Leased Premises on the Commencement Date [because a prior tenant has failed to deliver up possession of the Leased Premises or for any other cause beyond the control of Landlord], Landlord shall not be subject to any liability for the failure to give possession on the Commencement Date, nor shall the validity of this Lease or the obligations of Tenant, hereunder be in any way affected. Under such circumstances, unless the delay is the fault of Tenant, Rent shall not commence until the later of the date possession of the Leased Premises is given or the Commencement Date.
“One issue on [the American Industrial Real Estate Association] standard form is the commencement date. Parties should look beyond Paragraph 1.3, Term, which provides a blank to be filled in for the commencement date of the term of the lease. Elsewhere in the lease, Paragraph 3.3, Delay in Possession, provides that if the landlord fails to deliver the premises to the tenant by the scheduled commencement date, there is no penalty, unless the landlord delays delivery of the premises by 60 days. If that happens, the only recourse a tenant has is to terminate the lease. This section further provides that if the premises are not delivered within 120 days of the commencement date, the lease will automatically terminate. These two paragraphs can become problems when a dispute arises about construction delays for the tenant improvements to the premises, especially when the landlord is responsible for the work.”
“In reaching its decision the Court analysed the underlying principle of "vacant possession" and determined that "vacant possession" was not only the right of a tenant to possession of its premises at law, but also included a tenant's right to actual and unimpeded physical enjoyment of its premises with the power, in fact, to exercise its right. The existence of a physical impediment which substantially interferes with a tenant's enjoyment of its premises, to which the tenant had not consented, is no different than the impediment caused to a tenant by the presence of a trespasser.”
Examples of Term Clause
Premises and Term. Subject to the terms, covenants and conditions contained in this Lease, Landlord hereby grants to Tenant the temporary use and possession of the Premises and Tenant hereby accepts same for the Term. The Premises shall be used and occupied by Tenant solely for the permitted uses and for no other purpose without Landlord’s prior written consent, which shall not be unreasonably withheld. If during the period between the Pre-Completion Date (as below defined) and the Commencement Date, Tenant enters into the Premises, Tenant shall be responsible for any damages to the Premises caused by the negligence of Tenant, its employees, agents or visitors. The Premises is demised subject to all zoning regulations, restrictions, rules and ordinances, building restrictions and other laws and regulations now in effect or hereafter adopted by any governmental authority having jurisdiction. Landlord has not made, does not make, and has not authorized anyone else to make any representation as to the present or future physical condition, operation, or any other matter or thing pertaining to the Premises except as expressly set forth herein. Tenant’s use of the Premises shall be subject to such reasonable rules and regulations as may be promulgated and modified, added to or deleted by the parties hereto from time to time, provided that such rules and regulations and any modifications thereof or additions thereto or deletions therefrom (i) are not inconsistent with any provision of this Lease, and (ii) shall not be effective until a copy thereof has been delivered to Tenant. Landlord shall enforce such rules and regulations in a non-discriminatory manner but will not be liable to Tenant for failure of any tenant or person to comply therewith. The current rules and regulations are attached hereto as Exhibit “G”. In addition, Tenant’s use of the Premises shall be subject to the covenants, conditions and restrictions in force from time to time with respect to the industrial park of which the Building will form a part. The current industrial park covenants, conditions and restrictions are contained in the industrial Park by-laws, which are attached hereto as Exhibit “H”.
It is understood that Tenant shall have the right to use the roof of the Premises for installation and use of one or more microwave dishes or other communications radio antenna and associated equipment. Tenant shall have no obligation to pay rent for such right, but Tenant shall, at its sole cost and expense, maintain the roof in good condition and repair arising out of its use of the roof, and comply with all applicable laws regarding such use.
3.2 Early Access. Subject to the provisions of this Section 3.2, Landlord shall allow Tenant access to the Premises prior to the Commencement Date for purposes of installing Tenant’s furniture, fixtures, equipment, millwork and telephone/data cabling (“Tenant’s Fixturing Work”). Tenant and Tenant’s employees, agents, contractors, subcontractors, suppliers or any other person requiring access to the Premises in connection with the performance of Tenant Fixturing Work (each, “Tenant’s Construction Representative” and collectively, “Tenant’s Construction Representatives”) shall be subject to reasonable approval by Landlord prior to the commencement of their work, and Tenant shall cause Tenant’s Construction Representatives to engage only labor that is harmonious and compatible with other labor working in the Building. Tenant and Tenant’s Construction Representatives shall work cooperatively with Landlord to coordinate the scheduling and performance of Tenant’s Fixturing Work so as not to delay the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date. As a condition to entering the Building, each of Tenant’s Construction Representatives shall provide Landlord with satisfactory evidence of such commercially reasonable insurance as Landlord may reasonably require. Tenant’s Construction Representatives shall comply with Landlord’s current contractor rules and regulations, while in the Premises or elsewhere in the Project. Tenant’s Construction Representatives shall not interfere with or delay the construction of the Tenant Improvements or any other work in the Building. If at any time any of Tenant’s Construction Representatives hinders or delays construction of the Tenant Improvements or any other work in the Building or performs any work that impairs the quality, integrity or performance of the Tenant Improvements or other work in any portion of the Building, upon written notice from Landlord, Tenant shall promptly cause such Tenant’s Construction Representative to leave the Building and remove all of its tools, equipment and materials. Tenant shall reimburse Landlord for the cost of any repairs to the Premises or other portions of the Building or Common Areas to the extent necessitated by the acts or omissions of Tenant’s Construction Representatives. All entries into the Premises by Tenant or Tenant’s Construction Representatives prior to the Commencement Date shall be subject to all of the terms, covenants and conditions of this Lease, including, but not limited to, Tenant’s insurance obligations contained in Article 14 and Tenant’s indemnity obligations contained in Article 16, but excluding the obligation to pay Base Rent. In addition, Tenant shall not be charged for utilities or HVAC services, the use of freight elevators or loading docks, or security services during the periods of time that Tenant has access to the Premises solely for purposes of performing Tenant’s Fixturing Work or in connection with Tenant’s move into the Premises.