As a commercial real estate professional, you need to be an expert in critical date management. Leases contain a number of dates that impact the cost of occupancy with others even impacting your ability to leave or to stay in your space. Here are some of the most important dates that you will need to track:
Effective Date
The effective date is the actual date on which the lease is considered to have started. This date usually gets used to calculate anniversaries, expirations and option notification due dates.
Rent Commencement Date
This is the date on which you must make your first rent payment. Since many leases have a period of free rent included as an owner concession, this date frequently comes after the Effective Date.
Anniversary Date
The Anniversary Date is usually the month and day of the Effective Date. In most leases, rent increases commence on the Anniversary date. For leases where tenants pay CAMs, the Anniversary Date is usually also when the CAM reconciliation occurs. This makes it an important event in a critical date management regime since you may end up owing a large reconciliation payment to your landlord if the CAM collections were inadequate to cover the building's actual common area maintenance expenses.
Option Notification Date
Leases which offer tenants renewal options typically require the tenant to notify the landlord of their intent to exercise their option by a specific date. which is usually three or six months before the lease expires but can vary.
Expiration Date
The Expiration Date is the date on which your obligation to pay rent ends. It is also the date on which you must move out of your space. One secret to critical date management for leases is to get all of your dates straight in the beginning of the process. Asking your landlord to tell you what he sees as your exact option notification date and expiration date can save you from missing a deadline over a one- or two-day misunderstanding. Staying ahead of the dates in your leases will help you minimize occupancy costs and give your company as much flexibility as possible.
