The lease commencement date is the date the landlord makes the space available for the tenant's use. The rent commencement date is the date the tenant's obligation to pay begins. They are frequently months apart, and under ASC 842 it is the availability date, not the first payment date, that starts the lease term and puts the right-of-use asset and lease liability on the balance sheet. A lease can be signed in March, delivered in May, and start billing in September. Only one of those three dates is the commencement date for accounting, and it is not the one printed next to the words "Rent Commencement" in the document.
This is the single most common error in lease abstraction, and it is expensive in a quiet way. Nothing breaks. The schedule balances, the reconciliation ties, the file looks finished. The mistake only surfaces when an auditor samples the lease, or when a renewal notice deadline calculated off the wrong anchor passes without anybody noticing. This guide separates the four dates a commercial lease actually carries, works a dollar example showing what the difference costs, and lists where each date is evidenced in the document set.
The four dates in a commercial lease
Most leases contain at least four distinct dates that all get casually called "the start date" in conversation. They serve different purposes and they are rarely the same day.
| Date | What it marks | Drives what |
|---|---|---|
| Execution date | The day the last party signed | Contract enforceability only. Not an accounting trigger. |
| Possession or delivery date | The day the tenant gets keys and access | Build-out start, insurance obligations, and often the accounting commencement date. |
| Commencement date | The day the asset is available for the tenant's use | Lease term, ROU asset and liability recognition, straight-line expense. |
| Rent commencement date | The day the payment obligation begins | Cash billing and collections. Not when accounting starts. |
The trap is that leases define their own vocabulary, and the definitions are not standardized across the market. A lease can use the phrase "Commencement Date" to mean the day rent starts, which is a perfectly valid contractual definition and simply is not the accounting commencement date. Abstract the mechanics rather than the label, the same discipline that matters when reading a CAM cap or a recovery clause.
What is the lease commencement date under ASC 842?
Under ASC 842, the commencement date is the date on which the lessor makes the underlying asset available for use by the lessee. Availability is the test, not occupancy and not payment. If the tenant has the right to use the space, the lease has commenced for accounting purposes even if the space sits empty and no money has changed hands.
Everything measured in lease accounting hangs off that date. It is when the right-of-use asset and the lease liability are first recognized, when the lease term starts running for classification, when the discount rate is fixed, and when the amortization schedule begins. Get the date wrong and every downstream figure inherits the error.
The standard is deliberately indifferent to the payment schedule. A rent holiday, a fixturing period, or a free rent concession changes when cash moves, not when the asset became available. Those months are still part of the lease term, and the free rent is folded into total consideration and spread across the whole term rather than treated as four months of nothing followed by a normal lease.
What is the rent commencement date?
The rent commencement date is the contractual date on which the tenant must begin paying base rent. It is a billing trigger, and in a lease with any concession period it falls after the commencement date. Common patterns are a fixed calendar date, a date tied to substantial completion of the tenant's build-out, or the earlier of a build-out milestone and an outside date the landlord insists on.
That last construction matters more than it looks. "The earlier of the date Tenant opens for business and 150 days after Delivery" means the rent commencement date is not knowable when the lease is signed. It has to be fixed later, usually by a short commencement date letter or a confirmation amendment, and that document is the authoritative source rather than the lease itself.
Lease commencement date vs possession date
The possession date is when the tenant physically receives the premises. Under ASC 842 it is often the same day as the commencement date, because handing over the keys is normally what makes the asset available for use. The two separate when the landlord is still performing work the tenant cannot control, or when access is granted for a limited purpose that falls short of the right to use the space.
The question to ask is who controls the premises during the build-out. If the tenant takes possession and runs its own improvement work, the tenant controls the asset and commencement is the possession date. If the landlord is building out the space and the tenant only has inspection rights, the tenant does not yet have the right to use it and commencement is substantial completion or delivery. Who pays for the work is a separate question, covered in the tenant improvement allowance accounting guide, and the allowance treatment does not settle the control question by itself.
What the difference costs, in dollars
Take a lease with an ordinary structure. Executed March 1, 2026. Premises delivered to the tenant for its own build-out on May 1, 2026. Four months of free rent covering the fixturing period. Rent commences September 1, 2026 at $10,000 per month flat, for a ten-year paying term expiring August 31, 2036.
The tenant controls the space from May 1 and does its own improvement work, so the accounting commencement date is May 1, 2026. The lease term runs May 1, 2026 through August 31, 2036, which is 124 months, not 120. Total consideration is 120 payments of $10,000, or $1,200,000.
| Abstracted from rent commencement (wrong) | Abstracted from availability (correct) | |
|---|---|---|
| Commencement date | September 1, 2026 | May 1, 2026 |
| Lease term | 120 months | 124 months |
| Total consideration | $1,200,000 | $1,200,000 |
| Straight-line monthly expense | $10,000.00 | $9,677.42 |
| Expense recognized May through August 2026 | $0 | $38,709.68 |
| ROU asset first recognized | September 2026 | May 2026 |
Two things are wrong in the left column. Rent expense for the first four months is understated by $38,709.68, which lands in a fiscal year that gets reported. And the right-of-use asset and lease liability appear on the balance sheet a full quarter late, measured with a discount rate fixed on the wrong date. On a single lease that is a rounding item. Across a portfolio of two hundred leases where the same convention was applied by whoever keyed the import file, it is a restatement conversation.
The landlord side of the same lease has its own version of the problem. Bill from the possession date rather than the rent commencement date and the tenant disputes the first invoice, correctly. That charge then sits open while somebody reconciles it, and chasing a disputed invoice through the aging report costs an asset manager more time than reading the clause carefully would have.
Where each date is actually evidenced
Only one of these dates is reliably found in the lease body. The rest live in exhibits, letters, and amendments, which is why an abstract built from the base document alone is usually incomplete.
| Date | Where to look |
|---|---|
| Execution date | The preamble and the signature block. Check both; they disagree more often than you would expect. |
| Possession or delivery date | The delivery or landlord work provision, the work letter exhibit, and any delivery notice or acceptance letter. |
| Commencement date | The term provision, plus the commencement date letter or confirmation amendment that fixes it. |
| Rent commencement date | The rent provision and any abatement or free rent rider. Watch for an outside date that overrides the milestone. |
| Expiration date | Derived, not stated. Confirm which anchor the term counts from before you calculate it. |
The commencement date letter is the document that goes missing most often. It is one page, it is signed months after the lease, and it frequently never reaches the lease file because it arrived as an email attachment to somebody who has since left. If an abstract shows a commencement date with no supporting letter behind it in a lease that made the date contingent, that field is an estimate wearing the costume of a fact. Capturing it with its source reference is the whole point of a disciplined lease abstraction pass.
How the wrong anchor date compounds
The accounting error is the visible one. The operational errors are worse, because they run silently for years.
Option notice deadlines shift. A renewal option requiring twelve months' written notice before expiration is a hard date on a calendar. In the example above, an expiration of August 31, 2036 puts the notice deadline at August 31, 2035. Anchor the term to the possession date instead and the register says April 30, 2035. Four months of drift on a deadline where being late voids the option entirely. That is precisely what a critical dates register exists to prevent, and it only works if the anchor is right.
Escalation dates land in the wrong month. Annual increases usually run on lease years measured from commencement, not calendar years. A three percent bump keyed to the wrong month bills the wrong amount for the rest of the term, and it compounds. The rent schedule extraction has to carry the anchor date alongside the escalation rate or the schedule cannot be rebuilt.
Base years get misassigned. Where the lease sets a base year by reference to the first calendar year of the term, a commencement date that slides from one year into the next moves the entire operating expense baseline. That single field then drives every reconciliation for the life of the lease, as the base year guide works through.
Holdover gets calculated from a date nobody verified. Holdover rent is a multiple of the rent in effect at expiration, and expiration is derived from the anchor. Get the anchor wrong and the holdover exposure is wrong too.
Getting the dates right in an abstract
Six fields, captured together, with a clause or document reference on each:
- Execution date, taken from the signature block rather than the preamble where they differ.
- Possession or delivery date, with a note on whether the landlord or the tenant performed the build-out.
- Commencement date for accounting, meaning the availability date, recorded separately from whatever the lease calls its Commencement Date.
- Rent commencement date, with the abatement months stated as a count so the concession is not lost.
- Expiration date, with the anchor it was calculated from written down next to it.
- Whether a commencement date letter exists, and if so, what it says.
That last field is the one teams skip and the one auditors ask about. Recording "confirmed by commencement date letter dated August 12, 2026" turns a number somebody has to defend into a number somebody can point at. The lease abstract template lays out the full field set worth capturing while the document is already open, and every value in an abstract produced here links back to the page and clause it came from, so a reviewer confirms the date in a click instead of reopening the PDF.
If the abstract is feeding lease accounting software, this matters more, not less. Platforms such as EZLease, FinQuery, and Crunchafi all take leases in through a structured import, and the import asks for a commencement date without asking how it was derived. Whatever convention the person filling the template used becomes the convention for the whole portfolio, silently, which is the hidden project inside every ASC 842 implementation and the reason the import template question is worth asking any vendor before you sign. The ASC 842 lease data extraction page lists the full set of fields the measurement needs.
Frequently asked questions
What is the difference between lease commencement date and rent commencement date?
The lease commencement date is when the landlord makes the space available for the tenant's use, and it starts the lease term for accounting. The rent commencement date is when the tenant's payment obligation begins. Where the lease grants free rent or a fixturing period, rent commencement falls later, and under ASC 842 the earlier availability date is the one that triggers recognition.
What is the lease commencement date under ASC 842?
It is the date the lessor makes the underlying asset available for use by the lessee. Availability is the only test. The lessee does not have to occupy the space or make a payment for the lease to have commenced, which is why a rent holiday does not delay commencement and why the signing date is irrelevant to the accounting.
Is the lease commencement date the same as the possession date?
Often, but not always. If the tenant takes possession and controls the space during its own build-out, the possession date is the commencement date. If the landlord is performing the work and the tenant only has access to inspect, the tenant does not yet have the right to use the premises, so commencement is substantial completion or delivery instead.
Does free rent delay the lease commencement date?
No. Free rent, abatement, and fixturing periods affect when cash moves, not when the asset became available. Those months sit inside the lease term, and the total consideration is spread across the full term including them, which is why the straight-line monthly expense is lower than the stated monthly rent.
Can the commencement date be before the lease is signed?
Yes, and it happens regularly. If a tenant takes early access under a license or the parties operate on a letter of intent while documents are finalized, the asset can be available before execution. ASC 842 looks at availability rather than signature, so an abstract that defaults to the execution date will be wrong in these cases.
What is a commencement date letter?
It is a short document, usually one page and signed by both parties, that fixes the commencement date, the rent commencement date, and the expiration date once the contingencies in the lease have resolved. Leases that tie commencement to a milestone rather than a calendar date rely on it, and it is the authoritative source for those fields.
How do you calculate the lease expiration date?
Start from the anchor the lease specifies, apply the stated term, and check whether the term is counted in lease years or calendar months and whether it runs to a month end. A ten-year term from a September 1 rent commencement expires August 31 ten years later. Write the anchor next to the expiration date in the abstract so the calculation can be checked later.
Which date starts the lease term for ASC 842 classification?
The commencement date, meaning the availability date. Both the term used in the classification tests and the term used to measure the liability run from it, and the discount rate is fixed as of that date. Using the rent commencement date shortens the measured term, which can flip a borderline classification test.
What happens if we abstracted the wrong commencement date?
Correct the field, recalculate the schedule from the right date, and check what else was derived from it: the expiration date, every option notice deadline, the escalation months, and the base year if one was assigned by reference to the term. The dependent fields are usually the larger problem, since a missed renewal deadline cannot be recalculated after the window closes.
The takeaway
Four dates, one of which the accounting standard cares about, and it is not the one the lease labels most prominently. The rule is short enough to keep in your head: availability starts the lease, payment does not. Everything else follows from applying that rule consistently and writing down which document proved it. Capture the anchor, the derived expiration, and the evidence together while somebody is already reading the lease, and the schedule holds up under audit and the renewal option is still there when you want it.