A lease clause that impacts the quality of income and restricts a landlord's ability to pass through or recover operating expenses is a(n):

A lease clause that impacts the quality of income and restricts a landlord's ability to pass through or recover operating expenses is known as an escalation cap clause. This type of clause places a limit on how much certain operating expenses can increase over time, which is especially important for maintaining predictable income levels for landlords.

When a landlord cannot fully pass on rising operating costs to tenants, it can lead to reduced income stability and profitability, making the escalation cap clause critical for managing financial risk. By capping the amount of expense increases, landlords can better forecast their financial returns and manage their budget.

In contrast, co-tenancy clauses typically involve conditions tied to the occupancy of certain tenants, influencing the viability of a retail space. Fixed option clauses relate to predetermined rent amounts or terms that may not account for fluctuating market conditions. First right of refusal clauses generally allow a tenant the first opportunity to purchase the property before it is offered to others, without impacting the landlord's expense recovery capabilities.