Lease Commencement Date vs Rent Commencement Date vs Possession Date

The lease commencement date is when the lease term begins and the tenant's obligations attach. The rent commencement date is when the tenant starts paying rent, which is often later because of a free rent period or a construction delay. The possession date is when the tenant actually gets access to the space. Under ASC 842 the accounting clock starts when the lessor makes the asset available for use, so a tenant that took possession early recognizes the right-of-use asset and lease liability from that earlier date, no matter what the lease calls the commencement date.

Three dates in one document, frequently on the same page, and they drive different downstream systems. Get them confused and the expiration date is wrong, the option notice deadline is wrong, the straight-line rent schedule is wrong, and the abstract that the lease administration team relies on quietly corrupts every calculation that depends on it.

Last updated July 2026.

What is the lease commencement date?

The lease commencement date is the day the lease term legally begins. It sets the clock on everything measured from the start of the term: the expiration date, the option exercise windows, the renewal notice deadlines, any rent escalation anniversaries, and the tenant's obligations to insure, maintain, and operate the premises.

It is very often stated conditionally in the lease. Language like "the Commencement Date shall be the date Landlord delivers the Premises with Landlord's Work substantially complete, estimated to be March 1" does not give you a date. It gives you a formula. The actual date gets fixed later, in a commencement date agreement or commencement letter signed once delivery happens, and that document is the one that belongs in the abstract. Abstracting the estimated date from the original lease is one of the most common and most consequential errors in the field, because a two-month delay in delivery moves the expiration and every option deadline by two months.

What is the rent commencement date?

The rent commencement date is when the tenant's obligation to pay base rent begins. In the simplest leases it is the same as the lease commencement date. In most negotiated leases it is not, for one of three reasons: the tenant negotiated free rent, so rent starts a few months into a term that has already begun; the tenant needs a fixture period to build out and open, so rent begins on the earlier of a fixed date or the day the tenant opens for business; or delivery was delayed, and the lease pushes rent commencement out day for day.

Rent commencement is a payments field. It drives the accounts payable schedule and the first invoice. It does not, on its own, drive the term, the expiration, or the option windows, and it does not determine when a lease is recognized under US GAAP.

What is the possession date?

The possession date is when the tenant physically obtains access to the premises, or, put more precisely, when the landlord has removed any barrier to the tenant obtaining that access. It commonly comes before the lease commencement date. A tenant granted early access to run cable, install fixtures, or start its own build-out has taken possession, even if the lease says the term begins six weeks later and even if no rent is owed for that period.

That early access is where the accounting and the legal document part company.

Which date does ASC 842 use?

ASC 842 defines the commencement date of a lease as the date on which the lessor makes the underlying asset available for use by the lessee. It is a control test, not a label test. If the landlord hands over keys on January 15 for a build-out period and the lease says the term commences March 1, the ASC 842 commencement date is January 15. The lessee recognizes the right-of-use asset and lease liability then, and the classification test and the discount rate are determined as of that date.

The corollary that trips people up: when rent payments begin has no effect on the commencement date. A lease with six months of free rent still commences when the asset becomes available, and the free rent period is folded into the measurement of the lease liability and amortized across the term. Straight-line rent expense begins at commencement, not at rent commencement.

Can the rent commencement date come before the lease commencement date?

Rarely, and it is almost always a drafting error rather than an intention. What does happen, and looks similar, is a lease where the tenant pays for early access. That is not rent commencement under the lease; it is a separate license fee for a possession period preceding the term. Abstract it as what it is, because treating it as rent commencement will place the first escalation anniversary in the wrong year.

What is a commencement date agreement?

A short document, signed by both parties after delivery, that fixes the actual commencement date, the actual rent commencement date, and the resulting expiration date. It exists precisely because the lease could not state them at signing. It is one page, it is boring, and it is the single most important document in the file for anyone maintaining a critical date calendar.

It is also the document most often missing from a data room. A buyer abstracting fifty office leases will find commencement date agreements for maybe thirty of them, and for the other twenty the estimated dates in the lease are the only evidence available. Flagging those twenty as unconfirmed is a legitimate and useful abstraction output. Silently recording the estimated date as fact is not. This is one of the specific gaps a good critical date extraction process is designed to surface rather than paper over.

Why does confusing these dates cost money?

Four ways, in descending order of expense:

1. Missed option deadlines. Renewal notice windows run from the expiration date, which runs from the lease commencement date. If the abstract carries the estimated commencement date and delivery slipped by 45 days, the renewal window in the calendar is 45 days early. The tenant sends notice into a window that has not opened, the landlord rejects it as ineffective, and a below-market renewal option is lost.
2. ASC 842 misstatement. Recognizing the ROU asset from the lease commencement date when possession occurred two months earlier misstates the balance sheet and applies the wrong incremental borrowing rate. On a portfolio it is an audit finding. Our guide to determining lease term under ASC 842 covers the adjacent question of which option periods enter the measurement.
3. Wrong straight-line rent. Free rent amortized from rent commencement instead of lease commencement produces a rent expense curve that is wrong in every period, and it never self-corrects.
4. Escalation anniversaries off by a year. A rent bump tied to "each anniversary of the Commencement Date" applied from the rent commencement date instead skips or duplicates an increase. Nobody notices for three years, and then the reconciliation is unpleasant.

How do you abstract these dates correctly?

Capture all three as separate fields, never one "start date" field. Then capture the evidence for each:

• Lease commencement date: the confirmed date from the commencement date agreement if one exists. If it does not, record the conditional formula from the lease along with the estimated date, and mark the field unconfirmed. An abstract that cannot distinguish confirmed from estimated is not an abstract.
• Rent commencement date: the date from the rent schedule, adjusted for any delay provision and any free rent period, cross-checked against the first invoice if the property is already operating.
• Possession date: from the delivery notice, early access agreement, or the tenant's own records. This is the field most likely to live outside the lease entirely, and the accounting team needs it more than anyone else does.
• Expiration date: derived, not transcribed. Calculate it from the confirmed commencement date and the stated term, then compare it to any expiration date the lease states. When the two disagree, the lease has an error and somebody needs to know before an option deadline is calculated from it.

The delivery notices, early access letters, and commencement date agreements that establish these dates almost never arrive as clean digital records. They are scans, email attachments, and photographs of signed pages, and pulling dates out of them reliably means running them through AI document data extraction rather than asking an analyst to key them. Once extracted, they belong in the same abstract as the lease, because a commencement date agreement that sits in a separate folder is a commencement date agreement nobody will find during the next diligence.

What should the abstract show when the dates conflict?

The conflict, explicitly. A lease that states a 10-year term commencing March 1, 2020 and expiring February 28, 2030 is internally consistent. A lease that states a 10-year term commencing March 1, 2020 and expiring February 28, 2031 has a drafting error, and the abstract should carry both the derived date and the stated date with the discrepancy flagged, not silently pick one. The same is true when a commencement date agreement contradicts an amendment.

Every field in an abstract should cite the page it came from, and the reason is exactly this. Date disputes are resolved by reading a specific sentence in a specific document, and an abstract whose fields cannot be traced back to a sentence has moved the problem rather than solved it. That principle is why source-linked extraction is the baseline expectation now, and it is described in more detail in what a lease abstract looks like.

The short version

Possession starts the accounting. Commencement starts the term and every deadline measured from it. Rent commencement starts the invoice. They are three fields, they are frequently three different days, and any system that stores one "lease start date" is going to produce a wrong answer to at least two of the questions people ask it.

To extract all three dates, with the commencement date agreement reconciled against the lease and any discrepancy flagged, upload the documents to the tool at the top of this page. For the full set of dates a complete abstract carries, see the commercial lease abstract template. Accounting teams preparing a transition should start from how to prepare lease data for ASC 842, and teams that missed a deadline once and never want to again should read how renewal date tracking actually works. Portfolios of leases go through bulk lease upload, which flags every lease whose commencement date is unconfirmed.