What is "contract rent"?

"Contract rent" refers specifically to the rent stipulation outlined in a lease agreement between a landlord and a tenant. This is the predetermined amount that has been agreed upon in the lease contract, regardless of market conditions or other influences. It reflects the terms negotiated by both parties and is binding for the duration of the lease.

Understanding contract rent is crucial for property valuation and taxation purposes, as it helps assessors determine income potential from rental properties. This contrasts with "market rent," which may fluctuate based on current demand and supply conditions in the real estate market, reflecting what similar properties in the area might command. Other options presented, such as actual rent received by the landlord or rent calculated for potential gross income, also provide useful perspectives, but they do not define "contract rent" itself.