Terms to Look For in Your Commercial Lease Agreement

commercial lease agreement

A commercial lease agreement can be an intimidating document, especially for those who don’t work with real estate on a regular basis. Reading your entire lease carefully is vital to ensuring that you’re getting the best deal when you’re renting commercial office space; however, some terms and clauses are of particular importance and should be considered with the utmost of care.

6 terms to look for in a commercial lease agreement

Rent and Common Area Maintenance

The last thing you want is to end up with is a surprise when it comes time to make your first month’s rent payment. Take the time to carefully read the rent terms. Are there any fees in addition to your rent? When is the rent due and how must it be paid? What are the penalties for late payments? How much is the common area maintenance and what specifically does it cover? Consider all of this plus what isn’t included in your lease before you sign.

Right of First Refusal

When you find the perfect office space, you want to make sure that you have the chance to stay there when your lease is up. The right of first refusal clause says that your landlord must give you a chance to say that you don’t want to renew your lease before they make the property available to other prospective tenants.

Definition of the Premises

This part of your lease tells you exactly what you’re renting. Make sure that the entire office space’s square footage is correctly stated in the lease. If the landlord promised you use of shared facilities, such as restrooms in a corridor, a shared reception area or a shared break room or cafeteria, these spaces should also be mentioned here. Don’t leave anything as a mere promise. Make sure it’s spelled out in writing under the definition of the premises.

Subleasing and Assignment

If your business needs change and you no longer need all or part of your office space, this clause gives you the ability to sublease your space or assign it to another tenant to reduce your monthly costs. The future is unpredictable, so it’s worth it to fight to have liberal subleasing and assignment rights included in the language.

Use and Exclusives Clause

Does the lease have any stipulations on what kind of businesses can hold office space in the building? If so, is there any possibility that the defined acceptable uses may limit your future endeavors? You don’t want to find yourself unable to expand into a new field, niche or industry due to your restrictive lease. On the flip side, is there any language that protects you from having a competitor move in across the call? Depending on your line of business, an exclusives clause may be necessary to protect your interests.

Maintenance Clause

What happens when something goes wrong with your office space? Who is responsible for handling the cost of the maintenance and who is required to make arrangements to have repairs or maintenance done? Make sure the responsibilities are clearly defined to save yourself future headaches


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