Signing a commercial lease is one of the largest commitments a small business makes, yet the document is almost always written in the landlord's favor. Knowing where the traps tend to hide lets you negotiate before you are locked in.
Watch the pass-through costs
Many leases quote an attractive base rent and then layer on charges for taxes, insurance, and common area maintenance. These pass-through costs can grow year over year with little cap. Ask for a clear definition of what is included and a ceiling on annual increases.
Personal guarantees and renewal terms
A personal guarantee puts your own assets on the line if the business cannot pay. Sometimes it is unavoidable, but it can often be limited in time or amount. Equally important are renewal and exit provisions, which determine whether you control your own future at the location.
- Confirm who is responsible for repairs to the roof, HVAC, and structure.
- Look for exclusivity clauses that prevent a competitor from moving in next door.
- Understand the consequences of an early exit and whether you can sublease.
None of these terms are set in stone before you sign. A careful review, ideally with counsel, turns a one-sided document into a workable agreement that supports your business rather than threatening it.
