We’re entering the home stretch now in our series on commercial real estate fundamentals. This is the ninth post in the series and we’re continuing our discussion on Lease Clauses. Here’s an overview of the common lease clauses that start with the letters D-H.


The non‐performance of a lease obligation by the landlord or tenant. An act of default may be either monetary (i.e., failure to pay rent when due) or non‐monetary (i.e., failure to provide a certificate of insurance). In certain instances, the lease may allow the non‐defaulting party to cure the default of the defaulting party, and either bill the defaulting party for costs incurred therein or allow the non‐ defaulting party to offset costs incurred to cure against other amounts due pursuant to the lease.

Example of A Default Clause

ABC Tenant is late paying their Base Rent at Realogic Tower. The Landlord sends ABC written notice that they must pay their rent on a timely basis. If ABC fails to pay the Base Rent within 5 days after receipt of the notice, they are in Default under the lease because the lease contains a clause that the tenant has five calendar days after receipt of the notice from the Landlord to cure monetary defaults.

Important Information To Look For In Default Clauses

  • Number of days to cure monetary default (Note ‘business’ or ‘calendar’ days)
  • Number of days to cure non‐monetary default
  • Indication if cure periods are after LL notice
  • Determine if Tenant’s failure to comply with the same lease term for a specified number of times automatically constitutes a default


Legally, the act of preventing (estopping) a party from claiming a different state of facts at a later date. When associated with leases, the statement of facts includes that the lease is in existence, that there are no defaults and that rent has been paid and is current as of a specified date. Estoppels are memorialized via an estoppel certificate, which is an agreement that may be relied upon by a third party such as a potential lender or purchaser. Leases often grant the landlord the right to obtain an estoppel certificate from a tenant. However, certain leases (often for larger tenants) also provide the tenant with the right to obtain an estoppel certificate from the landlord. If you cannot locate an estoppel provision in a lease, check the Subordination provision. In some leases, the estoppel provision is contained within the subordination provision 

Example of An Estoppel Clause

The Landlord of Realogic Tower is in the process of selling the building. As part of their due diligence, the prospective buyer requires the Landlord to obtain Estoppel Certificates from all tenants currently occupying space within the building. ABC Tenant executes the Estoppel Certificate as drafted by the Landlord. After the sale closes, ABC makes a claim to the new Landlord that is in conflict with information contained on the Estoppel Certificate. ABC would be legally ‘estopped’ from making such a claim because they executed the Estoppel Certificate.

Important Information to Look For in Estoppel Clauses

  • Number of days (calendar or business) to respond to request
  • Whether requirement is mutual upon Tenant and Landlord
  • Whether a party other than Landlord may require Tenant to provide an estoppel
  • Whether a specified form is to be used


The sheltering of a party from liability arising out of negligence. In leases, an exculpation clause operates to limit the liability of an owner or landlord from lawsuits by a tenant for breach of contract or non‐performance of the assets of a particular property in which the tenant is in occupancy. Exculpation clauses often limit the tenant from claiming rights to other properties owned by the landlord or personal liability of the landlord or any of its employees.

Example of An Exculpation Clause

LIMITATION OF LANDLORD’S LIABILITY. Landlord’s obligations and liability with respect to the Lease shall be limited solely to Landlord’s interest in the Building, as such interest is constituted from time to time, and neither Landlord nor any partner or member of Landlord, or any officer, director, shareholder, or partner or member of any partner or member of Landlord, shall have any individual or personal liability whatsoever with respect to this Lease.


A Guarantor is a person or entity that agrees to perform the contractual obligations of another if the other party shall fail to so perform. Guarantors for lease obligations may either be personal or corporate.

Example of A Guarantor Clause

ABC Tenant wishes to sign a lease at Realogic Tower. ABC is a new company with very little net worth. However, the owner of ABC, Rich Mann, is a wealthy individual. As security for entering into the lease, the Landlord requires that the owner execute a personal guaranty whereby Rich Mann agrees to personally pay any lease obligations of ABC in the event that ABC defaults on any of its monetary lease obligations. Rich Mann would be the Guarantor under the lease.

Important Information To Look For In A Guarantor Clause

  • Type of Guaranty: Corporate or Personal
  • Guarantor name
  • Amount (May be “full payment and performance of lease obligations,” etc., or a specified amount)
  • Expiration Date of Guaranty, if applicable
  • Any scheduled reductions

Hazardous Materials

Materials, often defined by governmental law or statute, which, if introduced onto a property by either a landlord or a tenant, could result in a reduction of the value of the property or the ability of a tenant to use their leased premises for the purposes outlined in the lease. Hazardous Materials clauses within a lease specify the materials which are considered to be hazardous, provide for remedies if such materials are introduced on the property or in the leased premises and provide indemnities for the non‐introducing party should litigation occur.

Example of A Hazardous Materials Clause

ABC Tenant performs the business of photographic development from its premises at Realogic Tower. Many of the chemicals used in the development process have been identified as hazardous by federal and state laws. The Landlord, to protect itself, includes a Hazardous Materials clause in the lease with ABC, whereby if any of the chemicals used by ABC are stored, handled or disposed of in violation of federal and state laws, ABC shall be responsible for all required clean‐up and shall indemnify the Landlord in the event of any litigation.

Important Information to Look For In A Hazardous Materials Clause

  • Definition of Hazardous Materials via reference to the Lease Article. (Do not retype the technical definition of Hazardous Materials or Environmental Laws.)
  • Responsibility of Landlord for Hazardous Materials.
  • Responsibility of Tenant for Hazardous Materials.
  • Representations and warranties regarding Hazardous Materials.
  • Are any parties to the lease indemnified?


A tenant who remains in possession of leased premises after the expiration date of the lease is in holdover. Leases often allow the landlord to charge holdover rent to a tenant during the holdover period, typically quoted as a percentage (greater than 100%) of Rent, either Base Rent only or Base Rent and Expense Recoveries.

Example of A Holdover Clause

Upon the expiration of their lease at Realogic Tower, ABC Tenant does not vacate the premises because the space that they are moving into in another building will not be ready for occupancy for an additional two months. As of the expiration date, ABC is paying the Landlord $10,000/month for Base Rent and $4,000/month for expense recoveries. Because of a Holdover clause in ABC’s lease which allows the Landlord to charge holdover rent equal to 150% of Base Rent and Additional Rent during the holdover period, ABC must pay the Landlord $21,000/month ($14,000 multiplied by 150%) until they vacate Realogic Tower.

Important Information To Look For In A Holdover Clause

  • Rate-i.e., 150% of Base Rent, or 125% of Base Rent plus Additional Rent
  • If Tenant holds over, can the Landlord elect to extend the Lease?
  • Whether the holdover provision is different for a holdover with the Landlord’s consent as opposed to without the Landlord’s consent

Next up, a post on common Lease Clauses that start with the letters I – M. We covered A- C in our previous post. If you’d like a single resource that covers all the clauses from A- Z, we have two in our Library: The ABCs of Commercial Real Estate Leases, our comprehensive primer on leases, and our Glossary of CRE Lease Terms, which has definitions to over 140 lease terms, including many clauses. We’ll be back with our next post in The ABCs of Commercial Real Estate Leases series soon.

By Terry Banike, Marketing Manager, Realogic