New York State Real Estate Salesperson Licensing Exam

Which clause allows landlords to increase rent during the lease term?

1. Termination clause

2. Escalation clause

3. Adjustment clause

4. Renewal clause

The correct answer is: Escalation clause

The escalation clause is specifically designed to allow landlords to increase rent during the lease term based on defined conditions. This clause typically links rent increases to specific factors, such as inflation rates, operating costs, or market rates. By including an escalation clause in a lease agreement, both landlords and tenants have a clear understanding that rent may be adjusted under predetermined circumstances, which provides protection for the landlord against rising costs. In contrast, other clauses do not serve the same function. The termination clause details the conditions under which the lease can be terminated and does not address rent adjustments. The adjustment clause often refers to changes in terms or conditions of the lease that don't necessarily pertain to rent itself. The renewal clause pertains to the terms under which a lease can be extended or renewed after its initial term, rather than allowing for rent increases during the current lease period.