Escalation clauses and escalation mortgages are tools commonly used in real estate to adjust costs and payments in accordance with specific metrics, such as inflation or interest rates, to accommodate changing economic conditions.
An escalation clause in real estate is a contract provision allowing for an adjustment in the price based on external factors, often used in competitive bidding situations.
An escalator clause is a provision in a lease that requires the tenant to pay additional rent based on an increase in specified costs such as real estate taxes, operating expenses, or other financial metrics.
A tax stop is a clause in a lease agreement that sets a limit on the amount of property taxes the lessor (landlord) is responsible for paying. Any property taxes exceeding this limit are paid by the lessee (tenant).
