The term Rent Commencement Date refers to the specific date on which a tenant’s obligation to pay rent begins under the terms of a lease agreement. This date may or may not coincide with the date the tenant physically occupies the space, depending on the terms of the lease.
For instance, in some commercial leases, there may be a period after the lease is signed during which the tenant is finishing out or customizing the space to suit their needs (often referred to as the “build-out” or “fit-out” period). During this period, the tenant might not yet be required to pay the base rent. The Rent Commencement Date would then be set for a future date once the tenant is expected to start their business operations and utilize the space as intended.
It’s essential for both the landlord and the tenant to clearly understand and agree upon this date, as it marks the beginning of the tenant’s rental payment obligations.