Commercial Leases: Clauses Tenants Often Overlook
Repair, reinstatement and renewal terms deserve a second read before signing.
Most tenants focus on rent and lease length, but the clauses that cause the biggest problems are often buried deeper in the lease. This article highlights the terms tenants most often overlook and the questions they most often ask before signing.
The key points
A commercial lease can tie your business to obligations that last well beyond the day you move out. Reviewing these clauses before signing is far easier than negotiating them once a problem arises.
- Rent reviews and escalation: check how and when rent can increase, and whether there is a cap
- Service charges and outgoings: confirm what you pay on top of rent, such as maintenance, property tax, insurance and utilities
- Repair and reinstatement: understand what you must repair during the lease and whether you must restore the premises to their original condition at the end, which can be costly
- Renewal and early termination: check whether you have an option to renew, and whether you can exit early if your business needs change
- Assignment and subletting: see whether you can transfer the lease or sublet if you sell or restructure your business
- Deposits and guarantees: review the size of the security deposit and whether directors are asked to give personal guarantees
What to do next
Many of these terms can be negotiated before you sign, but very few can be changed afterwards. Talk to us to review your lease or offer letter before you commit, so you know exactly what you are taking on.
