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A lease that provides for adjustments of rent according to changes in a price index such as the consumer price index. The index used in establishing the escalation must be reliable and bear a close relationship to the nature of the tenant’s business. The most frequently used indexes are the consumer price index, also called the cost-of-living index, and the wholesale price index.

The escalator clause connects the rent to the index, so the index lease is also called an escalation lease. LIBOR is an abbreviation for “London Interbank Offered Rate.”
Dearborn Real Estate Education
This "Word of the day" is excerpted from The Language of Real Estate, 6th Edition by John Reilly (published by Dearborn Real Estate Education, 2006 copyright). To purchase the complete book, with over 2800 key terms and definitions, or to browse through Dearborn's hundreds of other professional real estate titles, including Real Estate Technology Guide by Klein, Barnett, Reilly, click here.