Nine questions to ask before you sign a commercial lease
The short answer: read the lease as a cost model, not a rent quote. Renewal, repairs, relocation and personal guaranties shape the real number.
What a lease really costs
Most owners negotiate the base rent and sign the rest. That is backwards. Over a five year term, operating expense pass-throughs, repair duties and exit terms usually move more money than a dollar per square foot ever will. Start every review by asking what the lease could cost in a bad year, not a normal one.
The nine questions
- How are common area and operating costs calculated, and is there a cap?
- Who repairs the roof, the HVAC and the parking lot, and who replaces them?
- Can the landlord move you to another unit, and who pays for the move?
- What renewal options do you hold, and how is renewal rent set?
- Does the personal guaranty ever end?
- May you assign the lease if you sell the business?
- What happens if the building is damaged and you cannot open?
- Which improvements must be removed when you leave?
- Is there a co-tenancy or exclusive use protection for your category?
Where the money hides
Two clauses cause most of the surprises we see. The first is an uncapped pass-through, where a new roof or a property tax reassessment lands on your monthly bill. The second is a relocation right that lets a landlord move a tenant with little notice, sometimes into a smaller or less visible space.
| Clause | Landlord draft | Owner-friendly ask |
|---|---|---|
| Operating costs | Pro rata share, no cap | 5% annual cap on controllables |
| Personal guaranty | Full term | Ends after 24 on-time months |
| Relocation | Any time, 30 days notice | Comparable space, landlord pays |
"A lease is a five year business plan written by the other side. Read it like one."
Before you sign
Ask for the landlord's operating cost reconciliations for the last three years, confirm zoning allows your use, and put every verbal promise into the document. If a term matters to you, it belongs in writing.
Common questions
Usually, yes. Landlords expect comments, and caps, guaranty limits and renewal terms are common asks, especially for longer terms.
Brokers are valuable on deal terms. Legal review focuses on risk allocation, guaranties and exit rights, so the two roles work well together.
A typical retail or office lease review takes three to five business days, including one round of comments to the landlord.
Julian Pruitt
Julian advises owners across the Charlotte region on contracts, formations and deals. This article is general information, not legal advice for your situation.
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