Glossary
Lease Terms & Dates
Base Rent
The fixed, recurring rent a commercial tenant pays before CAM, real estate tax, and insurance charges, which are usually billed separately as additional rent. Base rent is set in the lease and typically escalates on a schedule independent of the CAM reconciliation.
Firm impact
Firms should confirm a landlord hasn't quietly shifted a CAM charge into what the lease labels base rent, or the reverse, since a lease with a capped CAM structure gives a landlord an incentive to relabel a capped cost as uncapped base rent. Getting this classification right changes which cap or escalation clause actually governs the charge.
How this gets abused
A lease caps CAM increases at 5% a year, but the landlord's escalation notice lumps a facilities charge into the base rent schedule instead of the CAM reconciliation, where the 5% cap would have applied. The relabeled charge escalates at a higher, uncapped rate the base rent clause allows.
Practitioner note
Compare the escalation clause governing base rent against the cap or escalation formula governing CAM. If a charge that looks like an operating cost is billed inside the base rent schedule instead of CAM, check whether that placement helps the landlord avoid a cap that would otherwise apply.
FAQ
Questions about base rent
Is base rent the same as the total amount a tenant pays each month?
No. Base rent is the fixed portion. Most commercial tenants also pay additional rent for CAM, real estate tax, and insurance, which is billed and reconciled separately.
Why would a landlord move a cost from CAM into base rent?
If the lease caps CAM increases but not base rent escalations, moving a cost into the base rent schedule lets the landlord bill it without the cap that would otherwise apply.
You know the term. Now check the math.
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