Commercial leases are a world apart from their residential counterparts, being far more complex and fraught with hidden risk. All too often, crucial lease clauses are skimmed over or misunderstood, potentially leaving a tenant or landlord exposed to substantial legal and financial consequences. 

Both business tenants and property owners should understand and proactively address potentially troublesome lease clauses. These are some examples:

1. Operating expenses and common area maintenance (CAM) charges — Broad or ambiguous language can let landlords pass through capital improvements, management fees and administrative markups that tenants never anticipated. These clauses should be scrutinized. Are capital expenditures amortized over their useful life or charged all at once? Are management and admin fees reasonable? Tenants should insist on clear definitions of allowable expenses, set caps or annual limits on increases and require detailed supporting documentation. In addition, audit rights and transparent year-end reconciliations are essential negotiation points.

2. Repair and maintenance obligations — Who fixes the leaky roof, the old HVAC or ensures seismic code compliance? In older commercial buildings this can be a critical issue, especially under “triple net” leases that can shift significant repair duties (and costs) onto tenants, sometimes unintentionally. The clause should spell out who maintains which systems (from foundation to fixtures), include timelines for repairs and clarify remedies if deadlines are missed. Negotiate for warranties, service contracts and cost-sharing to minimize unpleasant surprises.

3. Assignment and subletting restrictions — The ability to assign or sublet can be the difference between a tenant’s business thriving or failing. Restrictive clauses can block a sale, expansion or business pivot. Landlords want control; tenants need flexibility. Tenants should focus on standards for consent (“not unreasonably withheld” versus “sole discretion”), recapture rights and obligations for sharing assignment profits. Define what qualifies as a “change of control,” especially for corporate tenants and limit excessive documentation or financial scrutiny.

4. Personal guaranties — A personal guaranty can transform a routine business risk into a deeply personal liability. Tenants should push to limit the scope. Consider “good guy” guaranties, caps or “burn off” provisions that expire after a record of timely payments. Always tie liability to clear triggers and require notice before enforcement. Landlords may benefit from security, but tenants must avoid open-ended personal exposure.

5. Default, cure periods and remedies — How quickly can a party be declared in default and what remedial actions are on the table? Watch for unreasonably short cure periods, aggressive fee shifting provisions, lockout rights and accelerated rent clauses. Tenants should negotiate for meaningful cure windows, clear definitions of “material” defaults and balanced remedies. Both sides benefit from certainty, predictability and fair enforcement procedures.

Commercial leases are not boilerplate forms. They are complex, negotiable instruments that shape long-term business health. Careful review and negotiation of these five often-overlooked clauses can mean the difference between costly litigation and ongoing stability. Always consult an landlord-tenant lawyer before signing or renewing a lease to ensure your rights and interests are truly protected.

Favaro, Lavezzo, Gill, Caretti & Heppell, PC in Vallejo represents California landlords and tenants in numerous legal matters. Please call our firm at 707-674-6057 or contact us online to schedule a consultation with our experienced legal team.