Read your lease like it's going to be used against you

A commercial lease is the largest contract most small business owners will ever sign, the one they understand least, and the one they sign fastest — because the space is going to somebody else if they don't move.

Here's what's in it.

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Triple net vs. gross — the number you were quoted isn't the number

Gross lease: rent includes the landlord's costs. What you're quoted is roughly what you pay.

Triple net (NNN): you pay base rent plus your proportional share of property taxes, building insurance and common area maintenance.

That share is real money. Depending on the market and the building, NNN charges can add anywhere from a modest amount to a substantial fraction on top of your base rent. Say a space is quoted at $2,000 a month; once NNN lands it can run north of $2,800 — and owners routinely budget for the first number and get surprised by the second in month two. (An example — your building's numbers are its own.)

What to do: ask for the actual NNN figure per square foot, and ask for the prior two years of actual charges. Estimates drift. History doesn't. And look up what the building is assessed at — if your share of the property tax doesn't square with the assessed value and your square footage, ask why.

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The personal guarantee

Usually one sentence, near the end. It says that if the business can't pay, you personally can. Not the LLC. You.

The broker will say it's standard, and it mostly is. Standard is not unnegotiable. Ask for:

• A burn-off — the guarantee expires after 24 or 36 months of on-time payment
• A cap — liability limited to six months of rent instead of the full remaining term
• A good guy clause — you're released if you give proper notice and hand the space back clean

None of these are exotic. All of them get granted when a tenant asks and never when they don't.

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CAM charges

Common area maintenance: parking lot, landscaping, lobby, shared HVAC, security, sometimes management fees.

Questions to ask: What's included? Is there a cap on annual increases? Are capital improvements excluded — or can the landlord charge you for a new roof over ten years? Can you audit the CAM reconciliation? Uncapped CAM with no audit right means the number can move and you have no recourse.

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Renewal traps

• Automatic renewal — the lease renews for another full term unless you give notice by a specific date
• Notice windows — often 6 to 12 months before expiration. Miss it and you've either renewed or lost your option.
• Option to renew at "market rate" — that's not a protection, it's a negotiation you'll have from a weak position
• Expiration date — know it, and know it a year out, because that's when you have leverage

Put the notice date on a calendar the day you sign.

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Tenant improvements

Who's paying to build out the space, what you're allowed to change, what has to be restored when you leave, and whether improvements you paid for become the landlord's property.

That last one catches restaurants especially: you install $60,000 of kitchen equipment and hood work, and the lease says fixtures become part of the premises.

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Maintenance responsibility

The single most expensive ambiguity in a small business lease: who fixes the HVAC when it dies?

Many leases put the tenant on the hook for HVAC, plumbing and electrical inside the premises. A rooftop unit replacement is thousands of dollars, and owners routinely discover their obligation the week it fails in August.

Get it in writing. If you're responsible, get a maintenance contract before you need it — most leases that assign you the responsibility also require you to carry one.

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If you're month-to-month

A lot of small businesses are, especially ones that started in a family building or a friend's space.

Understand the exposure: the owner can sell the building, and you can be given thirty days. Everything you built out, your signage, your customers' muscle memory for your address — all of it is on a thirty-day clock that isn't yours.

Month-to-month also means you cannot get most loans against the business, because a lender won't underwrite a location you might not have next quarter.

What to do: go to the owner with a proposal, not a complaint. A short initial term with options to extend gives them a reliable tenant and gives you something a bank will lend against. Most owners would rather have a signed lease than an empty building.

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What your lease says about your insurance

Your lease specifies coverage limits, requires the landlord be named as additional insured, and often requires a waiver of subrogation. Your certificate of insurance may not match. If it doesn't, you're technically in default and won't know until something happens.

Pull both documents out and compare them. It takes ten minutes and one email to your broker.

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Before you sign anything

1. Get the actual NNN figure and two years of history
2. Ask about the personal guarantee — burn-off, cap, or good guy clause
3. Ask for a CAM cap and an audit right
4. Write the renewal notice date on a calendar
5. Confirm who fixes the HVAC
6. Compare the lease's insurance requirements to your actual policy
7. Then send it to an attorney — with a specific list of questions instead of "can you look at this?"

That last step matters. A lawyer reviewing a lease cold bills you for reading. A lawyer answering seven specific questions bills you for answering seven questions.

Upload your lease and get all of this in plain English — expiration, lease type, your NNN exposure, the guarantee, the CAM terms, the renewal dates, and who's responsible for what. Start free — the lease review comes with the Three Businesses plan, or free with an organization code from your chamber.

Informational, not legal advice. For anything you're about to sign or dispute, talk to an attorney — you'll just get there with a shorter list.