An artificial breakpoint set below the natural breakpoint can trigger $10,000 to $50,000+ in extra percentage rent annually versus a natural breakpoint.
The breakpoint in a percentage rent clause determines the sales threshold above which the tenant owes additional rent. A natural breakpoint is calculated by dividing the minimum rent by the percentage rent rate, creating a fair threshold. An artificial breakpoint is a fixed number set by the landlord, often lower than the natural breakpoint, which triggers percentage rent earlier.
The type of breakpoint directly affects when percentage rent kicks in and how much total rent you pay. An artificial breakpoint set below the natural breakpoint means you start owing percentage rent at a lower sales volume, effectively increasing your total rent obligation. For high-volume retail tenants, the difference between a natural and artificial breakpoint can mean tens of thousands of dollars annually.
“The Breakpoint for calculation of Percentage Rent shall be the "Natural Breakpoint," defined as the quotient of the annual Minimum Rent divided by the applicable Percentage Rent rate. By way of example, if the annual Minimum Rent is $150,000 and the Percentage Rent rate is 5%, the Natural Breakpoint shall be $3,000,000. In no event shall Landlord impose an Artificial Breakpoint that is lower than the Natural Breakpoint. If Minimum Rent increases during the Lease Term, the Natural Breakpoint shall be recalculated accordingly.”
This is illustrative language only. Your actual lease language controls your rights.
Upload two PDFs. 14 detection rules. Under 15 minutes. Free.
$10,000-$50,000+
The difference between a natural and artificial breakpoint can cost retail tenants an estimated $10,000 to $50,000+ per year in additional percentage rent [industry estimate]
Source: Retail Lease Analysis Reports (2024)
Upload two PDFs. 14 detection rules. Under 15 minutes. Free.
Next Best Step
Walk through the full audit steps before you upload your lease and CAM statement.
Review the audit process before you upload your lease and reconciliation.
See the output and proof structure before you commit.
Run the free audit when you want documented findings.
Ready to skip the reading and document the overcharge directly?
Find My OverchargesNeed to extract lease terms before your audit?
A CAM audit is only as accurate as your lease data. lextract.io extracts 126 structured fields from any commercial lease PDF: CAM definitions, pro-rata share, caps, base year, and audit rights. So you have the exact terms your landlord is supposed to follow.
Go to lextract.ioThis page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.
