Lease Agreement Checklist
Don't sign a commercial lease without checking every item. Review rent terms, space details, legal provisions, and hidden costs — with red flags and negotiation tips for each line item.
Lease Agreement Checklist
0 / 6Confirm the exact monthly amount, due date, and acceptable payment methods. Ensure the rate is quoted per rentable vs. usable square foot.
Vague language like 'market rate' without a fixed number, or rent due on receipt rather than a specific date.
Negotiate a few months of free or reduced rent (abatement) at the start of your lease to offset move-in costs.
Check whether increases are fixed (e.g., 3% per year), tied to CPI, or at landlord's discretion.
Uncapped escalation clauses or language that lets the landlord adjust rent 'as deemed appropriate.'
Push for a fixed annual cap (2-3%) rather than CPI-based increases, which can spike unpredictably.
Get a full breakdown of CAM fees: janitorial, landscaping, security, property management, etc. Ask for historical CAM statements.
No cap on CAM charges, or 'gross-up' provisions that let the landlord bill as if the building is fully occupied.
Negotiate a CAM cap (typically 3-5% annual increase) and exclude capital expenditure pass-throughs.
Understand the breakpoint above which percentage rent kicks in. Confirm whether it is a natural or artificial breakpoint.
Artificially low breakpoints that guarantee extra rent from day one, or inclusion of online sales in gross revenue calculations.
Negotiate exclusions for returns, employee discounts, and sales taxes from gross revenue calculations.
Verify the deposit amount, conditions for return, timeline, and whether interest accrues in your favor.
Deposits exceeding 3 months' rent, or vague return conditions that give the landlord wide discretion to withhold.
Negotiate a decreasing deposit schedule — e.g., reduced by a third each year if you pay on time.
Confirm the grace period (typically 5-10 days) and the exact penalty amount or percentage.
No grace period, or compounding interest on late payments rather than a flat fee.
Negotiate at least a 5-day grace period and ensure penalties are capped at a reasonable flat fee (e.g., 5% of monthly rent).
Space & Build-Out
0 / 5Get exact usable square footage measurements independently verified. Understand how rentable square footage is calculated (load factor).
A load factor above 15-20% for office space, or no distinction between rentable and usable footage in the lease.
Hire your own architect or space planner to measure usable square footage before signing.
The load factor is the ratio of rentable to usable space. Typical ranges: 10-15% for single-floor, 15-20% for multi-floor buildings.
Load factors above 20%, or the landlord refusing to disclose how common areas are measured.
Negotiate based on usable square footage rather than rentable, or push for a lower load factor.
Confirm the dollar-per-square-foot TI allowance, what it covers, disbursement schedule, and whether unused funds can be applied to rent.
TI allowance that is amortized into your rent at high interest rates, or restrictions that require using only the landlord's contractor.
Negotiate for a higher TI allowance or the right to choose your own contractors. Get unused TI applied as rent credit.
Understand who approves plans, the timeline, and whether the landlord can reject designs. Confirm who owns improvements at lease end.
Clauses requiring you to restore the space to original condition at your expense when you leave.
Negotiate that improvements become the landlord's property at lease end so you avoid costly demolition.
Document the current condition of HVAC, electrical, plumbing, internet, and structural elements before signing.
No warranty on building systems, or language shifting all repair liability to the tenant from day one.
Request a building condition report and negotiate landlord responsibility for pre-existing issues for at least the first year.
Lease Term & Flexibility
0 / 5Confirm the exact start date, whether it is tied to occupancy or a calendar date, and total term length.
Commencement dates tied to 'substantial completion' without a hard deadline or penalty for landlord delays.
Negotiate a 'drop-dead' date: if the space isn't ready by a certain date, you can walk away or receive rent abatement.
Check how many renewal options you have, the notice period required, and how renewal rent is determined.
Renewal at 'fair market value' without a cap, or very short notice windows (e.g., 6 months) for long-term leases.
Lock in renewal rates (e.g., 95% of market rate) and negotiate at least 9-12 months' notice period.
Understand if you can terminate early, the required notice, and any penalties or fees.
No termination clause at all, or termination penalties that include all remaining rent through the original term.
Negotiate a termination option after year 2-3 with a reasonable penalty (e.g., 3-6 months' rent plus unamortized TI).
Confirm whether you have priority on nearby spaces if they become available, and the terms of that right.
Rights that expire quickly or require you to match any third-party offer within an unreasonably short period (e.g., 48 hours).
Negotiate a right of first offer (you get notified before it's listed) rather than right of first refusal (you match an existing offer).
Check if you can give back a portion of your space if your needs shrink, and under what conditions.
No contraction rights in a long-term lease, leaving you locked into more space than you may need.
Negotiate the right to contract by 20-30% of your space after a set period, with reasonable notice and a modest penalty.
Responsibilities & Operations
0 / 5Clarify exactly what the landlord vs. tenant is responsible for: HVAC, plumbing, electrical, structural, roof, exterior walls.
Triple-net (NNN) language that shifts all maintenance to the tenant, including structural and roof repairs.
In NNN leases, negotiate a cap on your annual maintenance liability and exclude structural/roof from your obligations.
Review required coverage types (general liability, property, business interruption), minimum limits, and whether the landlord must be named as additional insured.
Unreasonably high coverage requirements (e.g., $5M+ general liability for a small office), or requirements to insure the landlord's property.
Get insurance quotes before signing to confirm costs. Negotiate reasonable limits based on your business type and space size.
Confirm which utilities are included in rent vs. billed separately: electricity, water, gas, internet, trash removal.
Sub-metering that adds a markup to utility costs, or the landlord controlling HVAC with no after-hours access.
Negotiate after-hours HVAC access at a reasonable rate, and confirm you can choose your own internet provider.
Understand what signage you are permitted: building directory, suite entrance, lobby, exterior. Review size and design approval process.
No signage rights, or approval processes that give the landlord unlimited veto power.
Negotiate specific signage rights in the lease (not just a promise) including dimensions, placement, and that approval won't be unreasonably withheld.
Confirm the number of reserved and unreserved spaces, location, and monthly cost per space.
Parking ratios below 3:1000 SF for office space, or rapidly escalating parking fees with no cap.
Lock in parking rates with the same escalation cap as your rent, and ensure adequate visitor parking.
Legal Provisions
0 / 6Determine if the landlord requires a personal guarantee, the scope, and whether it decreases over time.
Full personal guarantees for the entire lease term with no burn-off, or guarantees that extend to renewal periods.
Negotiate a 'good-guy guarantee' (you guarantee rent only until you vacate) or a burn-off schedule that reduces exposure over time.
Confirm whether you can sublet or assign, the landlord's approval process, and any profit-sharing requirements.
Blanket prohibitions on subletting, or the landlord keeping 100% of any sublet profits above your rent.
Negotiate that the landlord cannot unreasonably withhold consent, and that you keep at least 50% of sublet profits.
Ensure you can assign the lease if you sell your business, and that the terms transfer to the buyer.
Clauses that let the landlord recapture the space upon assignment, or that void favorable lease terms on transfer.
Negotiate that assignment in connection with a business sale does not trigger recapture or require landlord profit-sharing.
Review what constitutes default, the cure period, and the landlord's available remedies (eviction, acceleration, etc.).
Short cure periods (under 10 days for monetary, under 30 days for non-monetary), or acceleration clauses for all remaining rent.
Negotiate at least 10 days for monetary default cure and 30 days for non-monetary, plus the right to cure before eviction.
Check whether disputes go to arbitration, mediation, or litigation, and in what jurisdiction.
Mandatory arbitration with an arbitrator chosen solely by the landlord, or litigation required in a distant jurisdiction.
Negotiate for mediation first, then arbitration, with mutually agreed-upon arbitrators and a local venue.
Confirm the lease addresses events beyond either party's control: natural disasters, pandemics, government orders.
No force majeure clause at all, or one that only protects the landlord but not the tenant.
Ensure force majeure covers rent abatement if the space becomes unusable due to events outside your control.
Frequently Asked Questions
What is the most important thing to check in a commercial lease?
The rent escalation clause and CAM charges are often the most impactful. A seemingly small 5% annual escalation on a 10-year lease can nearly double your rent. Always model out total occupancy cost over the full lease term, not just year-one rent.
Should I hire a lawyer to review my lease?
Absolutely. A commercial lease is a legally binding contract typically worth hundreds of thousands of dollars over its term. A real estate attorney experienced in commercial leases will cost $1,500-$5,000 for a review but can save you many times that by catching unfavorable terms.
What is a triple-net (NNN) lease and should I be concerned?
In a NNN lease, the tenant pays base rent plus property taxes, insurance, and maintenance costs. While the base rent is lower, your total costs can be unpredictable. Always negotiate caps on NNN expenses and get 3 years of historical expense data before signing.
How negotiable are commercial leases?
Almost everything in a commercial lease is negotiable, especially in tenant-favorable markets. Common wins include free rent months, higher TI allowances, capped escalations, flexible termination rights, and reduced personal guarantees. The landlord's first offer is rarely their best.
What are the biggest hidden costs in a commercial lease?
The most common hidden costs are uncapped CAM and operating expense pass-throughs, after-hours HVAC charges, end-of-lease restoration requirements, and property tax escalations. These can add 20-40% on top of your base rent if not properly negotiated.