A commencement date clause defines when the lease term officially begins and, accordingly, when the tenant's obligation to pay rent commences. In leases where significant landlord build-out work is required before the tenant can occupy the space, the commencement date is often tied to "substantial completion" of the landlord's construction work rather than to a fixed calendar date, making the actual start of the lease term contingent on construction progress.
By Angel Campa, Founder · Updated March 2026
Commencement date clauses directly determine when rent obligations begin and must be precisely defined to prevent disputes about the start of the lease term. When the commencement date is tied to construction completion, delays in the landlord's work can push the rent start date back — which benefits the tenant initially — but also push the entire lease expiration date back by a corresponding period. If the expiration date is tied to a fixed calendar date rather than a term measured from commencement, construction delays can effectively shorten the tenant's lease term without reducing the rent obligation.
Negotiate a long-stop date: if the space is not substantially complete by a specified date (e.g., 180 days from execution), the tenant has the right to terminate the lease without penalty and recover any security deposit. Include a definition of "substantial completion" that requires all core systems (HVAC, electrical, plumbing) to be functional even if minor punch-list items remain. Ensure the rent commencement date and the lease expiration date are both measured from commencement, not from fixed calendar dates, so that construction delays do not shorten the net effective lease term.
Fixed calendar date commencement (most common for as-is spaces), substantial completion commencement (most common for build-to-suit leases), commencement upon landlord's written notice, and commencement upon tenant's actual occupancy for business purposes.
Lextract extracts these fields directly from your lease PDF when this clause is present:
Rent Abatement Clause
A rent abatement clause provides the tenant with a defined period of free or reduced rent at the beginning of the lease term — commonly referred to as "free rent" or a "rent holiday." The abatement period allows the tenant to generate revenue from the space before full rent obligations begin, partially compensating for build-out costs and the time required to establish operations in the new location..
Holdover Clause
A holdover clause defines the legal consequences for a tenant who remains in possession of the leased premises after the lease expiration date without executing a new lease or renewal.
Force Majeure Clause
A force majeure clause excuses a party's performance obligations under the lease when extraordinary events beyond their control — including natural disasters, pandemics, wars, government orders, and utility failures — make performance impossible or commercially impracticable.
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