Tenants often have the same concerns when reviewing the legal terms of a commercial lease agreement. Understanding these concerns early can avoid costly disputes in the future and also ensure the parties reach a fair and balanced agreement.
This article outlines the top concerns tenants have about commercial lease agreements, based on real project data on ContractsCounsel, when connecting with experienced real estate lawyers for contract review and negotiation services.
Note: this analysis is based on anonymized data from thousands of commercial lease reviews posted on ContractsCounsel.
| Concern | Why It Matters | How Lawyers Help |
| Renewal & Rent Increases | Tenants want clarity on renewals, rent hikes, and extra costs. | Lawyers review renewal terms, rent formulas, and cap added fees. |
| Maintenance & Repairs | Tenants don’t want to be stuck with major repair costs. | Lawyers define landlord vs. tenant repair duties. |
| Assignment & Subletting | Tenants need flexibility to transfer or sublet space. | Lawyers review and negotiate fair assignment rights. |
| CAM Fees & Expenses | Hidden or rising fees can strain business budgets. | Lawyers cap increases and exclude non-tenant costs. |
| Personal Guarantees | Guarantees can expose owners’ personal assets. | Lawyers limit or remove guarantee obligations. |
| Use & Exclusivity | Restrictions can limit business operations. | Lawyers clarify allowed uses and protect exclusivity rights. |
| Early Termination | Tenants want clarity on penalties if they exit early. | Lawyers explain costs and negotiate fairer terms. |
| Lease Enforceability | Tenants worry leases won’t hold if ownership changes. | Lawyers confirm leases bind new owners and protect tenant rights. |
Renewal Options, Rental Increases, and Landlord Costs
Concern 1: Tenants are concerned about how leases renew, how future rent increases are calculated and applied, and what extra costs, if any, the landlord can pass along to the tenant.
This concern comes from people wanting to understand the full financial implication of signing the lease, so the tenant can plan for any rent increase or cost that comes their way.
How lawyers help: Real estate lawyers will review the renewal terms, check for any rental increases and how they are calculated (i.e., fixed, CPI, market-based, etc.) and ensure there are limits on extra costs the landlords can shift to the tenants.
Liability for HVAC, Plumbing, and Maintenance
Concern 2: Many tenants raise concerns about their responsibility for repairs to things like cooling systems, plumbing, and other structural maintenance. Given these costs can add up quickly, their concern is valid, and they want to make sure the lease does not put too much responsibility on them.
How lawyers help: Attorneys will clarify which party is responsible for routine maintenance versus property improvements. They can also negotiate terms, so the landlords bear the responsibility of major repairs or replacements.
Assignment and Subletting Rights
Concern 3: Given how quickly things in the business world can change, tenants frequently want the flexibility to sublet space or assign the lease to another business. Some leases have language that restricts these options or require landlord approval.
How lawyers help: Real estate attorneys can review the assignment and subletting clauses in the lease to confirm whether restrictions are reasonable. If not, they can help negotiate on behalf of the tenant to make them reasonable or even improve them to limit the number of restrictions imposed on the tenant.
Operating Expenses and Common Area Maintenance (CAM) Fees
Concern 4: Commercial leases will often require tenants to all share in CAM fees or other operating expenses. Without being careful, landlords may pass through unexpected costs like admin fees or capital improvements.
Unexpected costs can hurt businesses, so being aware of these lease terms is important.
How lawyers help: Commercial real estate lawyers will see how CAM fees are defined, negotiate caps on increases, and try to exclude non-tenant related expenses from being passed through.
Personal Guarantees and Tenant Liabilities
Concern 5: Some landlords will include terms in commercial leases that require the business owner to take personal guarantees on the rent which can expose personal assets if the business fails or defaults on the lease.
How lawyers help: A lawyer will review the language around guarantees and their scope, and help negotiate limits. They can also advise on other ways to protect personal assets.
Use Restrictions and Exclusivity Clauses
Concern 6: Landlords will often include terms that restrict how tenants can use the space and whether competitors are allowed to operate in the same building. For retail businesses, exclusivity rights can be very important to the success of their business.
How lawyers help: Real estate lawyers will confirm and explain any use restrictions and make sure they are not overly limiting. They will also address exclusivity clauses to make sure tenants are protected and have the ability to operate without direct competition in the same building.
Early Termination Penalties and Lease Buyouts
Concern 7: Many tenants have concerns about the language for early termination or buyout obligations. When a business fails, they may need to terminate the lease early and they want to understand what happens if this is the case.
How lawyers help: A lawyer can review the termination terms and calculate potential penalties the tenant will bear. They can also try to negotiate more favorable terms from the landlord.
Lease Enforceability and Ownership Changes
Concern 8: Tenants are often concerned about what happens if the property is sold and whether their lease will still be valid. They also want to make sure the lease is enforceable and their lease rights will remain protected.
How lawyers help: A real estate lawyer can review the lease to make sure it is binding for future owners. They can also review enforceability under local law and make sure the tenants stay protected in the case of ownership change.
Key Takeaways
- The number one concern tenants have about commercial lease agreements is related to financial matters – renewal rights, rent increases and passthrough costs.
- Liability for repairs, CAM fees, and personal guarantees can create major financial exposure.
- Restrictions on use, assignment, or early termination limit tenant flexibility.
- A lawyer can confirm enforceability and negotiate terms that protect the tenant’s long-term interests.
Need help with your commercial lease agreement?
If you need a lawyer to review your commercial lease, consider using ContractsCounsel’s platform to find and hire a lawyer to help. All lawyers are vetted by our team and work with clients on a daily basis on similar projects.
