DEFINITION of 'Recapture Clause'

A provision usually found in percentage leases, especially in shopping-center leases, giving the landlord the right to terminate the lease - thereby recapturing the premises - in the event the tenant does not maintain a specified minimum amount of business. For example, a poorly performing retail shop in a shopping center can damage the shopping center's image and therefore the bottom line of all tenants and the landlord.

BREAKING DOWN 'Recapture Clause'

A recapture clause is intended to protect a landlord by making sure that tenants maintain a certain amount of revenue. The recapture clause allows a means for an underperforming retail store to be removed, opening the space for a more profitable endeavor. A recapture clause also protects a landlord in an instance where the tenant attempts to sub-lease the property for a profit.

RELATED TERMS
  1. Lease

    A legal document outlining the terms under which one party agrees ...
  2. Single Net Lease

    A commercial real estate lease agreement in which the tenant ...
  3. Sublease

    A real property rental agreement between an original tenant and ...
  4. Gross Lease

    A type of commercial lease where the landlord pays for the building's ...
  5. Ground Lease

    An agreement in which a tenant is permitted to develop a piece ...
  6. Landlord

    A real estate owner who rents or leases land or a building to ...
Related Articles
  1. Investing

    8 Lease Clauses You Need To Know

    If you're renting an apartment this year, beware of signing contracts with these tricky clauses.
  2. Investing

    Buying a House with Tenants: A Quick Guide

    Before buying a house with tenants, know the risks and responsibilities you're taking on.
  3. Managing Wealth

    4 Things Landlords Aren't Allowed To Do

    Whether you're a landlord or a tenant, you need to know the rules.
  4. Managing Wealth

    Millennials Guide: How To Read a Lease

    Everything you need to know before you rent a home.
  5. Investing

    How Does a Modified Gross Lease Work?

    A modified gross lease is a rental agreement where, in addition to their rent, tenants pay a share of other costs associated with the property.
  6. Investing

    5 Tips For First-Time Renters

    Knowing the main points of a lease will make sure you don't sign - and end up paying for - something you don't want.
  7. Managing Wealth

    11 Mistakes Inexperienced Landlords Make

    Avoid these pitfalls if you considering purchasing a rental property.
  8. Investing

    5 Tips For Finding A Good Landlord

    A bad landlord can ruin the best rental property. Find out how to find an honest landlord that you can rely on.
RELATED FAQS
  1. What are the differences between single, double and triple-net leases?

    Learn the ins and outs of net lease agreements, including the key differences between single net, double net and triple net ... Read Answer >>
  2. Can you ask your landlord to remove a waiver of subrogation clause from your lease?

    Learn how to remove a waiver of subrogation clause from a lease. Find out also why you might not want to strike this clause ... Read Answer >>
  3. Is a waiver of subrogation clause better for a tenant or a landlord?

    Find out why a waiver of subrogation clause is important to include in a lease agreement, and understand how it affects landlords ... Read Answer >>
  4. What kinds of real estate transactions use triple net (NNN) leases?

    Learn how a net-net-net or triple net lease works and why it is popular in commercial real estate transactions. It is also ... Read Answer >>
  5. Why might a bond agreement limit the amount of assets that the firm can lease?

    Bond covenants can limit the amount of leases a company can have because leasing contracts are a form of debt. Taking on ... Read Answer >>
Hot Definitions
  1. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  2. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Down Round

    A round of financing where investors purchase stock from a company at a lower valuation than the valuation placed upon the ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Portfolio Investment

    A holding of an asset in a portfolio. A portfolio investment is made with the expectation of earning a return on it. This ...
Trading Center