The Most Common Mistakes Tenants Make in Commercial Leases (and How to Avoid Them)

Signing a commercial lease is a major decision for most businesses. The terms of the agreement can lock your organization into long-term financial commitments that could cripple or even destroy your organization if the terms are unfavorable. Unfortunately, there are numerous mistakes that tenants make when signing these leases. Avoiding these errors is crucial for the future of your organization.

Misunderstanding the Full Cost of the Lease

It’s natural for would-be tenants to focus primarily on the base rent when considering a new space, but that number rarely reflects the real cost. Most commercial leases include additional expenses that can catch a business owner off guard – including common area maintenance fees or utilities. These costs can vary greatly from year to year, making it difficult for your organization to budget or prepare for them.

To avoid this, request a full breakdown of all operating expenses from the landlord and seek to include caps on increases where possible. A lease that appears affordable on the surface may turn problematic if you fail to read the fine print.

Overlooking Maintenance Responsibilities

Many tenants incorrectly assume that the landlord is responsible for major systems like HVAC, electrical, and plumbing. In reality, commercial leases often assign these responsibilities to the tenant.

The key for these provisions is to clearly define who is responsible for maintaining and repairing which parts of the property. Look closely at vague or overly broad language that places the burden for maintenance on the tenant. Your attorney can help revise the terms so you’re not unknowingly accepting long-term repair obligations that should be the landlord’s responsibility.

Not Verifying Use Permissions and Zoning Compliance

Tenants sometimes assume they can use the space however they wish, only to learn that is not the case. Local zoning laws or regulations can put a damper on your intended use for a space – especially when the prior tenant used it for a very different purpose. What’s more, there could be unforeseen issues such as exclusivity clauses preventing the landlord from leasing to a specific type of business.

Before you sign a commercial lease, it is a good idea to have an experienced attorney confirm that there are no issues standing in the way of your business operations.

Talking With an Commercial Lease Attorney Can Prevent Future Harm

Perhaps the most common and costly mistake is signing a lease without having it reviewed by an attorney. Business owners are often eager to lock down a location and may assume the lease is “standard.” But commercial leases are rarely neutral. Landlords draft these agreements to protect their interests—and unless reviewed and negotiated, the tenant may unknowingly accept burdensome terms.

A qualified commercial real estate attorney can identify one-sided provisions and negotiate terms that reflect your needs and reduce future risk. A small investment in a legal review can save you from costly litigation that could put your entire company at risk.

Learn How Bradshaw Legal Can Help

Having the support of an attorney can be invaluable when negotiating your commercial lease. Reach out to Bradshaw Legal as soon as possible for a private consultation.