Lease Commencement Date vs Rent Commencement Date vs Expiration Date

When Rent Commencement Follows Lease Commencement

The lease commencement date vs rent commencement date gap trips up many lease abstracts, because the two dates often fall on different days. The lease commencement date starts the term. The rent commencement date starts base rent, and a fit-out period or free rent often pushes it later. The lease expiration date is counted from whichever of the two the lease names.

That makes three dates, and each one belongs in its own field.

Lease administrators feel the gap in practice. The first rent invoice, the first month of operating expense billing, and the end of a tenant’s free rent all hang off dates that the signed lease sets. The person who abstracts the lease has to put each date where it belongs. Collapse them into one “start date” and every downstream date inherits the error, from the rent roll to the renewal calendar.

Commencement Tied to an Event

Many leases do not state a fixed commencement date, especially when the space is being built or renovated before the tenant takes it. They give an estimated date plus a trigger: delivery of the premises, substantial completion of the landlord’s work, or the earlier of a fixed date and the trigger. Until the trigger happens, the estimate is only an estimate.

Move-in and early access are different events. A tenant who gets the keys on a Tuesday to start installing cabling has not necessarily started the term; the lease’s definition of commencement decides. The move-in date may match neither the commencement date nor the rent commencement date, so record it separately if the lease or the landlord’s delivery notice gives one. Once the real date is known, many leases call for a commencement date memorandum that fixes it. Sample memoranda filed as exhibits on SEC EDGAR, such as this lease exhibit with a commencement date memorandum, confirm the commencement date and the expiration of the initial term.

Rent Held Back by Design

A fit-out period (some leases say build-out period) gives the tenant time to build the space before rent starts. The work letter attached to the lease fixes the scope of the landlord’s work and the tenant’s work, sets any tenant improvement allowance, and describes the delivery condition and timing that trigger rent commencement. Rent commencement may fall a fixed number of days after commencement, on the day the tenant opens for business, or on the earlier of the two.

Free rent can also sit inside the term, after rent commencement. A lease might abate base rent for the first two full months, then start charging it. Record which kind of rent the lease abates. Additional rent (CAM, taxes, insurance) may start on another date, and a retail lease may give percentage rent its own start. Each of these start dates is lease wording to capture, and the abstract should say which rent the abatement covers, because a tenant who thinks it also covers operating expenses will dispute the first statement.

Where the Term Is Counted

The expiration clause decides which date the term runs from. Sample clauses show two common conventions. One counts to the last day of the Nth full calendar month after the rent commencement date. Another ends the term on the day before the Nth anniversary of the commencement date. Lease clause collections on Law Insider carry both, along with variants like “the last day of the month in which occurs the fifteenth (15th) anniversary of the Rent Commencement Date”.

A free rent period changes the expiration date only if the lease counts the term from rent commencement or extends the term to make up for abatement. The abstract should quote the clause next to the computed date, so the next person to open the record can see which convention produced it.

A Fit-Out Lease, Dated Throughout

The Sample Lease Terms

The tenant, landlord, and every date below are invented for illustration. Nothing here is legal or accounting advice, and your own lease’s wording controls what applies to you.

The lease supplies the expiration wording in one of two forms, and the lease decides which. Variant A ends the term on the last day of the 120th full calendar month after the rent commencement date. Variant B ends it on the day before the tenth anniversary of the commencement date.

Each Date as It Lands

The July stub period, 2027-07-06 to 2027-07-31, is prorated only if the lease says so. Under variant A, August 2027 is the first full calendar month after rent commencement, so the 120th full month is July 2037 and the term ends on its last day. Under variant B, the tenth anniversary of 2027-03-17 is 2037-03-17, and the term ends the day before.

The two expirations sit four and a half months apart. A record with a single “start date” field cannot hold both the date the term began and the date rent began, so whichever one it holds, the computed expiration comes out wrong for one of the two conventions.

Accounting Commencement Is a Fourth Date

Lease accountants work from their own definition. In the FASB ASC 842 master glossary, the commencement date is the date on which a lessor makes an underlying asset available for use by a lessee. The Deloitte DART roadmap on ASC 842 commencement date adds that the timing of lease payments does not affect it. IFRS 16 uses the same wording in Appendix A.

The roadmap includes an example where the tenant has access on March 1 to build leasehold improvements while legal commencement is June 30. The accounting date can come before the contractual one, which is why a lease administrator sometimes hears “the lease started in March” from finance and “the lease starts in June” from legal.

In the sample lease, suppose the landlord had allowed early access for cabling before 2027-03-17. The accountants would ask whether that access made the space available for use, and that judgment belongs to them. The lease record can hold the access date and who granted it, so the question can be answered later without digging through email. Lextree keeps the governance record of lease terms and does not perform the ASC 842 calculation.

When the Dates Are Disputed

No Signed Commencement Memorandum

Sample memoranda handle silence differently. One gives the tenant ten days to return the signed memorandum and treats no response as agreement. Another says failure to sign does not affect the commencement or expiration of the lease term. If the landlord sends a memorandum and the tenant never returns it, the clause in that lease is what matters.

Record what the clause says, mark the estimated date as unconfirmed in the notes, and file the memorandum when it arrives. A common slip is leaving the estimated 2027-03-01 in the record for months because nobody went back after delivery; every date computed from it, including the expiration, stays wrong until someone does.

If the memorandum comes back with a date that differs from the landlord’s delivery notice, attach the notice to the memorandum’s row and note which one the lease treats as controlling.

Tenant Delay, Landlord Delay

Many work letters separate the two kinds of delay. Tenant delay may push rent commencement later with no abatement. Landlord delay may earn the tenant a day-for-day credit, or abatement after a grace period. Some leases deem completion to occur on the date it would have occurred but for the tenant’s delay.

One common piece of evidence is the AIA G704 Certificate of Substantial Completion, which records the date of substantial completion, the time allowed to finish the remaining items, and the date the owner will occupy. Record the date the paper shows and the clause that moved the date.

In the sample lease, suppose the landlord’s contractor finished two weeks late and the work letter extends the tenant’s fit-out period day for day. The 120-day outside date then moves from 2027-07-15 to 2027-07-29, while the opening-for-business trigger still applies if the tenant opens first. Keep the original and the adjusted dates in the notes so the reasoning survives a change of administrator.

Three Dates on One Lease Record

In the Real Estate module, a Property Lease comes set up with separate fields for the commencement date, the rent commencement date, and the expiration date. A company can change fields, and the seeded values are defaults. The rent commencement field describes the date rent starts when it is later than the commencement date.

The commencement and expiration dates come from the most recent row in the lease’s Documents register that sets them. That row can be the original lease, a commencement date memorandum (one of the seeded document types) that fixes an estimated date, or an extension that moves the end. Rent commencement is its own field. Lease expiration reminders fire at 180, 90, 60, and 30 days, and the Commenced entry on the timeline takes its date from the commencement date. For a portfolio view of these dates, see how lease critical dates are tracked across a portfolio.

When a lease is extended or a memorandum arrives, the new document goes into the register and the dates follow it, so the record shows which paper set each one. For your next lease, enter all three dates in a register that keeps them apart, such as a property register with separate lease date columns. Teams that also watch renewal windows can pair it with tracking renewal option notice dates.