Reversionary Lease
Definition of "Reversionary lease"
The reversionary lease definition is a lease that only starts at a later date. It is not a lease that starts only when another current lease ends. That is a lease of reversion. Not to be confused.
It is often used when the occupancy of a property is postponed for a future date. It can easily be used if, for example, a renter of a particular space runs a business there. The business is profitable and the owner of the space is happy because he has a stable tenant. In this case, a reversionary lease can be drafted to start at the end of the current lease. The lease is done between the same entities just for a different timeline.
A reversionary lease in real estate will also avoid the troubles that an extension of the current lease might bring. An extension on a current lease brings with it taxes, having to register the land as well as other results.
With a reversionary lease in place, if the lease ends at an inconvenient time and both parties want to continue the contract, the change will go by smoothly and both parties are free to go about their own business interests.
Popular Real Estate Terms
Net operating income (NOI) of property relative to its market value. If rental income property worth $1,000,000 results in NOI of $100,000, the overall return is 10%. NOI compared to ...
A passive house is a construction that has limited to zero carbon footprint. These kinds of houses have been developed as an answer for the necessity to lower pollution for the benefit of ...
Lender's written assurance that the borrower has fully paid the obligation. The borrower may then show this instrument to interested parties. ...
Significant elevation of land. Narrow upward strip. Connection of edges between different sloping surfaces. ...
Tendency to go to the party or situation of the lowest level of opposition. ...
Charge by the lender to keep credit available to the potential borrower. Once the loan is made, interest is charged on the amount borrowed. Real estate businesses often need money available ...
High quality, premium wood to be used in construction such as for home building. ...
Periodic expenditures undertaken to preserve or retain a property's operational status for its originally intended use. These expenditures do not improve or extend the life of the property. ...
Federal agency that aids veterans of the armed forces. For example, it guarantees a home loan for up to a predetermined dollar amount or percentage of the loan balance, whichever is less. ...
Have a question or comment?
We're here to help.