Lease Commencement
Lease commencement is the date the tenant's lease legally begins — often distinct from rent commencement, which is when rent begins accruing after any free-rent period or build-out period.
What it means
In commercial leases, lease commencement is when the lease takes legal effect — the tenant has possession rights, insurance obligations begin, and the lease term starts counting. Rent commencement may be the same date or later, depending on free-rent periods or build-out allowances.
Leases may have: (a) lease commencement and rent commencement on the same date (simple case); (b) early possession for build-out with rent commencing after build-out; (c) free-rent periods where possession and lease commencement align but rent accrual is delayed. Clear lease documentation is critical.
Related terms