Commercial leases: the five clauses tenants sign without reading
Rent escalation, CAM charges, restoration, termination options and the guarantee. Read those five and you have read the lease.
By Thomas Vance
1 min read
Most tenants negotiate the rent and sign everything else. The rent is the one number in a commercial lease that is already fair. The money is elsewhere.
Rent escalation
An uncapped index clause tied to CPI can move a New York rent by double digits in a bad year. Ask for a cap, a floor of zero, and a written example of the calculation.
CAM charges
Ask which costs are capital and which are operating, and whether the landlord may pass through a roof replacement as maintenance. A one-line exclusion for capital expenditure saves more than a rent-free month.
Restoration
The obligation to return the unit in its original state can cost more than a year of rent. Photograph the handover, attach the photographs, and agree in writing which of your fit-out stays.
Termination options and the guarantee
A termination option that requires the tenant to be free of any default is not a termination option. And a parent guarantee should end when the lease does, not when the landlord releases it.
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