plug
Definition
In commercial real estate leases, a 'plug' is a fixed, assumed number that landlords use to calculate certain costs when the actual number isn't known yet. Landlords insert this placeholder figure into lease formulas so both parties can agree on how expenses will be calculated before real data is available.
Example
Your landlord might use a plug of $50,000 for annual operating expenses in your lease, even though actual costs won't be known until the end of the year when all the bills are tallied up.
Watch Out
The plug figure can significantly affect how much you end up paying, so make sure you negotiate a reasonable number before signing rather than accepting whatever the landlord proposes.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.