Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

Which term describes increasing amounts of rent as outlined in the lease agreement?

1. Fixed Increase Clause

2. Step Lease

3. Escalation Clause

4. Incremental Lease

The correct answer is: Escalation Clause

The term that describes increasing amounts of rent as outlined in the lease agreement is an escalation clause. This clause specifically stipulates that the rent will rise at predetermined intervals or due to specified conditions, such as inflation, increased property taxes, or other operating expenses. It provides clarity for both the landlord and tenant regarding future rent obligations, allowing for a structured increase rather than leaving it ambiguous. In this context, a fixed increase clause refers more generally to rent that increases by a set amount at regular intervals, whereas a step lease typically denotes a lease with rent increases at specific intervals but does not convey the same broad applications as an escalation clause. Incremental leases could imply gradual increases but are not standard terminology used in real estate to define the structured rent increases characteristic of escalation clauses.