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Question: 1 / 740

What does an escalator clause relate to?

Rental rate adjustments based on an index

An escalator clause is a provision in a lease or contract that allows for adjustments in rental rates, usually linked to specific indexes or factors. This clause is particularly useful in long-term leases where the landlord and tenant want to ensure that the rental rates remain fair and in line with economic conditions over time. For example, the rental rate might be adjusted annually based on a recognized cost-of-living index or inflation rate, allowing the landlord to increase rent periodically in a way that is predictable and transparent to the tenant.

The other options do not accurately reflect the specific purpose of an escalator clause. Changes related to property management fees, adjustments to lease terms, or tax increases are not the focus of this clause, which specifically addresses rental rate adjustments tied to certain indices.

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Changes in property management fees

Adjustments to the length of a lease term

Annual increases in property taxes

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