July 30, 2026
Most business owners have signed a handful of residential leases in their life and maybe zero commercial ones before the day they're asked to sign a thirty-page document full of terms like "CAM reconciliation" and "estoppel certificate." That gap in familiarity is exactly why commercial leases favor whoever wrote them, and it's almost always the landlord's attorney who wrote the first draft.
You don't need a law degree to protect yourself, but you do need to know which clauses actually matter and what questions to ask before you sign. Here's a walkthrough of the sections that have the biggest impact on your actual cost of occupancy and your operational flexibility.
Base Rent vs. Additional Rent (CAM)
Base rent is the number that gets quoted to you first, and it's often not close to your total monthly cost. Depending on the lease type, you may also owe "additional rent," most commonly Common Area Maintenance (CAM) charges: your share of costs for maintaining shared areas like parking lots, landscaping, lobby areas, and shared utilities, plus often a pass-through of property taxes and insurance.
CAM charges are usually estimated monthly and then reconciled annually against actual costs, meaning you can get a bill (or a credit) after year-end once the landlord tallies real expenses. Ask for the CAM cap, if there is one (a limit on how much CAM charges can increase year over year), and ask for a breakdown of what's included. Some landlords include capital improvements or management fees in CAM that arguably shouldn't be passed through to tenants. Get the definition of CAM in writing and get the prior year's actual CAM statement if the space has been previously occupied, so you're not underwriting your occupancy cost off a guess.
Lease Type: Gross, Modified Gross, or NNN
The lease type determines who pays for what, and it changes your true occupancy cost dramatically even at an identical base rent number.
- Gross lease. The landlord pays taxes, insurance, and most maintenance out of the rent you pay. Your monthly number is close to your total cost, with fewer surprises.
- Modified gross lease. Costs are split between landlord and tenant based on the specific terms negotiated. This is the category where the most variation exists, so read the expense allocation section carefully rather than assuming anything based on the label alone.
- Triple net (NNN) lease. You pay base rent plus your proportional share of property taxes, insurance, and maintenance (the "three nets"). NNN leases usually quote a lower base rent number, which can look attractive until you add in the net charges and realize your total occupancy cost is comparable to, or higher than, a gross lease elsewhere.
When comparing two spaces, never compare base rent alone. Calculate your total estimated occupancy cost per square foot, including CAM, taxes, insurance, and utilities, for each option before deciding.
Renewal Options and Rent Escalations
If you're planning to be in a space for more than one lease term, the renewal option clause matters as much as the initial rent. Look for: how many renewal options you have, the notice period required to exercise them (often 6-12 months before expiration, and missing that window can forfeit the option entirely), and how renewal rent is determined — a fixed percentage increase, a fair-market-value reset, or tied to an index like CPI.
Rent escalations within the initial term matter just as much. Most commercial leases include a scheduled annual increase, commonly in the 2-4% range, sometimes structured as flat dollar increases instead. Make sure you know the exact schedule for the full term you're signing, not just the starting rent, since a lease that looks competitive in year one can become expensive by year five.
Assignment and Subletting Rights
Business circumstances change. You might need to downsize, relocate, sell the business, or bring in a new partner who needs to take over the lease. The assignment and subletting clause governs whether you can transfer your lease obligations to someone else, and under what conditions.
Most leases require landlord consent for assignment or subletting, which is standard. What varies, and what you should negotiate, is whether that consent "shall not be unreasonably withheld" (a meaningful protection for you) versus consent being entirely at the landlord's discretion (much weaker for you). Also check whether an assignment releases you from liability under the lease or whether you remain on the hook if the new tenant defaults, that distinction matters enormously if your business situation is the reason you're trying to exit in the first place.
Maintenance and Repair Responsibilities
The lease should spell out, item by item, who is responsible for what: HVAC systems, roof and structural elements, plumbing, electrical, storefront glass, and interior finishes. A common and costly surprise for tenants in NNN or modified gross leases is discovering they're responsible for HVAC replacement, not just routine service, when a unit fails mid-term. Ask specifically whether you're responsible for repair only, or repair and replacement, on major building systems, and consider whether you want a home warranty-style service contract as part of your negotiation if HVAC responsibility falls on you.
Personal Guarantee Scope
If your business is newer, smaller, or doesn't have an extensive credit history, landlords will often ask for a personal guarantee, meaning you personally, not just your business entity, are on the hook if the lease is broken. The scope of that guarantee is negotiable more often than tenants realize.
Look for whether the guarantee covers the full lease term or steps down (a "good guy" or burn-off guarantee that reduces or ends after a certain point, often once you've established a payment track record). Also check whether the guarantee is capped at a specific dollar amount or unlimited. A capped, burn-off personal guarantee is a completely different risk profile than an unlimited guarantee for the full term, and it's very often negotiable, especially if you have some leverage in the deal (multiple space options, a strong financial profile, or a landlord eager to fill vacancy).
Termination and Default Provisions
Read what constitutes a default (usually non-payment beyond a cure period, but sometimes broader) and what the landlord's remedies are, including acceleration clauses that can make the entire remaining rent for the term immediately due if you default. Also check for any early termination rights you may have negotiated, whether tied to a payment (a termination fee) or a specific trigger (like a co-tenancy failure in a retail center, where an anchor tenant leaving gives you an out).
If the lease has no termination flexibility at all and your business model carries real uncertainty (a new location, a first retail concept, an industry with cyclical demand), that's worth raising in negotiation before you sign, not after you're locked in.
The Practical Takeaway
None of these clauses are unusual or predatory on their own. What creates risk is signing without understanding them, because a landlord's attorney wrote the first draft in the landlord's interest, and most of these terms are genuinely negotiable if you ask before you sign rather than after. A tenant representation broker's job, alongside a real estate attorney reviewing the final document, is to make sure you understand exactly what you're agreeing to and to push back on the terms that don't need to be as one-sided as the first draft usually is.
How I Help
I represent tenants through the lease negotiation process, from identifying space to reviewing lease terms alongside your attorney to make sure the clauses above actually reflect a fair deal, not just the landlord's opening position. That includes benchmarking your total occupancy cost against comparable space in the market so you know whether the deal in front of you is competitive.
If you're evaluating a lease, renewing an existing one, or starting a space search and want representation on your side of the table, you can schedule a call here, call (919) 797-5900, or reach me at sebastian@mullarkeycre.com.
This article is for informational purposes only and does not constitute legal advice. Lease terms vary significantly by property and landlord. Have any commercial lease reviewed by a qualified real estate attorney before signing.