I review and negotiate commercial leases for landlords and tenants on both sides of the table. After enough years doing this, the disputes start to look familiar. They almost always trace back to the same handful of lease provisions that got rushed or glossed over when the deal was signed.
Here are the terms I see landlords and tenants fight about most, and what I tell clients to nail down before they sign.
1. CAM charges and what counts as a common area expense
Common area maintenance charges are supposed to cover the tenant's share of upkeep on shared spaces like parking lots, landscaping, and common utilities. Fights break out when the lease language is vague about what can be included.
Tenants should push for a defined list of includable expenses, a cap on annual increases, and the right to audit the landlord's CAM calculations. Landlords should make sure the lease clearly allows recovery of the costs they are actually going to incur, including capital improvements if that is the intent.
2. Assignment and subletting restrictions
Tenants often do not think about assignment rights until they need to sell their business or downsize and want out of the space. If the lease gives the landlord unrestricted discretion to refuse an assignment, the tenant can be stuck.
I encourage tenants to negotiate a standard of reasonableness for landlord consent, and to think through what happens if their business gets acquired or restructured. Landlords, for their part, want enough control to vet a new tenant's creditworthiness and use of the space.
3. Personal guaranties
Landlords frequently want a personal guaranty from the business owner, especially for a new business or one without a long financial track record. This defeats some of the liability protection the owner thought they had by operating through an LLC.
When a guaranty is unavoidable, I try to negotiate limits on it, such as a cap on the dollar amount, a burn-off provision that releases the guaranty after a period of on-time payments, or a guaranty that only covers a portion of the remaining term.
4. Renewal options and how the renewal rent gets set
A renewal option is only as good as the mechanism for setting the rent. Vague language like "market rent at the time of renewal" invites disputes, because landlord and tenant rarely agree on what the market rate actually is.
I prefer language that spells out an appraisal process or another objective method to resolve disagreements, so the parties are not left negotiating from scratch with no leverage on either side.
5. Maintenance obligations and default remedies
Leases need to be specific about who fixes what. Structural repairs, HVAC, roof, and plumbing are common flashpoints, especially in older buildings. If the lease is silent or ambiguous, both sides tend to assume the other is responsible until something breaks.
Default and remedy provisions deserve the same attention. What triggers a default, how much notice and cure period the other party gets, and what remedies are available all need to be spelled out clearly. Ambiguity here almost always favors whichever side has more resources to fight about it later.
A commercial lease is a long-term relationship disguised as a document, and the provisions that seem minor at signing are usually the ones that cause the most trouble years later. If you are negotiating a commercial lease as a landlord or a tenant, reach out through blgattorney.com or call my Oklahoma City office before you sign.