Commercial Lease Checklist: What to Verify Before Signing
Commercial Leases Require Detailed Review
Commercial leases are heavily negotiated documents with fewer legal protections than residential leases. Use this checklist to ensure you review the terms that matter most to your business.
Rent and Financial Terms
- Base rent amount and any annual escalations are clear
- Rent structure is defined (gross, net, NNN, percentage rent)
- CAM charges are capped with maximum annual increases
- Property taxes and insurance pass-through amounts are estimated
- Security deposit amount and return conditions are specified
- Rent-free period or tenant improvement allowance is documented
Space and Use
- The premises are clearly described with square footage
- Permitted use clause is broad enough for your business and potential pivots
- Exclusivity clause protects you from direct competitors in the same building or center
- Signage rights are addressed
- Parking allocation is specified
- Hours of operation requirements are acceptable
Maintenance and Improvements
- Landlord vs. tenant maintenance responsibilities are clearly defined
- Tenant improvement process and approval timeline are specified
- Ownership of improvements at lease end is addressed
- HVAC, plumbing, and structural repair obligations are assigned
- Building condition and required repairs before move-in are documented
Term and Termination
- Lease term and commencement date are stated
- Renewal options and terms are included
- Early termination rights and penalties are defined
- Default triggers and cure periods are reasonable
- Holdover provisions are acceptable
Liability and Insurance
- Personal guarantee is limited or absent
- Insurance requirements are defined and reasonable
- Indemnification obligations are proportionate
- Casualty and condemnation provisions include rent abatement
- Landlord liability for common areas is addressed
Assignment and Subletting
- Right to assign or sublet with landlord consent (not unreasonably withheld)
- Change of control provisions for your business entity
- Profit sharing on sublet income, if any
When to Consult a Lawyer
Consider consulting a commercial real estate attorney for any commercial lease, particularly those involving a personal guarantee, long-term commitment, or significant tenant improvement investment. Commercial lease terms are highly negotiable, and professional review often pays for itself.
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.