Contracts
A Washington commercial lease is described as 'for a term of 5 years commencing November 1, 2025 at $8,500 per month with 3% annual escalations.' This type of escalation clause is called a:
APercentage rent clause
BFixed step-up rent clause✓ Correct
CCPI-adjusted rent clause
DParticipation clause
Explanation
A fixed step-up rent clause (or graduated rent clause) specifies predetermined rent increases at fixed intervals or amounts over the lease term. A 3% annual increase is a fixed, known escalation rather than tied to an index.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
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