Escalator Clause

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Escalator Clause

A stipulation contained in a union contract stating that wages will be raised or lowered, based upon an external standard such as the cost of living index. A term, ordinarily in a contract or lease, that provides for an increase in the money to be paid under certain conditions.

Escalator clauses frequently appear in business contracts to raise prices if the individual providing a particular service or type of merchandise is forced to pay more for labor or materials.

Such clauses are also often part of contracts or leases executed subject to price-control regulations. When this type of provision is in a lease, a landlord has the power to collect the maximum amount of rent allowed under rent regulations that are in effect at the time of the lease. The escalator clause provides that if the rent regulations are altered during the time of the lease, the tenant must pay the new rental fee computed pursuant to the revised regulations.

escalator clause

n. a provision in a lease or other agreement in which rent, installment payments or alimony, for example, will increase from time to time when the cost of living index (or a similar gauge) goes up. Often there is a maximum amount of increase ("cap") and seldom is there a provision for reduction if the cost of living goes down or for deflation instead of inflation. (See: cap)

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Yet in the wording of many escalation clauses, the owner is not able to pass through any, or a smaller portion, of the inflationary increases in operating expenses, thereby subsidizing remaining tenants.
We have existing contracts that include price escalation clauses covering increased costs.
Accessibility of parking and the escalation clause in the lease were classified as very important by office tenants.
The accounting firm's new lease, which runs for three years without an escalation clause, calls for payment of $10.
Escalation clauses, which were intended to keep a rental rate current with inflation and market increases, were a significant cause of the most current trend of having no CPI escalation.
The authority's recent ability to garner 10-year contracts with shipping lines, which include minimum annual guarantees and escalation clauses in regard to both volume and revenue, increases the predictability of its revenue stream.
However, some of the costs that the company must recover reflect increases related to higher usage during the abnormally hot summer of 2005 and other factors associated with escalation clauses in the NUG contracts.
Public Light & Power Analysis (comprehensive assessment of energy operating expenses recoverable by lease escalation clauses
Matters he has been involved with include successfully challenging valuations, obtaining tax exemptions for new construction and redevelopment, rendering opinions on the potential taxation of projects, and the negotiation, drafting, auditing and defense of lease tax escalation clauses.
The remaining errors of approximately $5 million relate primarily to estimated corrections of the company's accounting for facility leases and associated rent escalation clauses, of which approximately $2 million relate to discontinued operations.
Nadler also has extensive experience in the real estate sector where her expertise encompasses such areas as acquisition due diligence, financing agreements, and rent escalation clauses of leases.
Revenues have become increasingly predictable due to the recent ability of the authority to garner 10-year contracts with shipping lines structured with minimal annual guarantees and escalation clauses in regard to both volume and revenue.