The commercial lease clauses that decide whether the business survives year three

Commercial leases are not consumer contracts and nothing in them is standard. Five provisions do most of the damage. The rent structure. Triple net means the tenant pays base rent plus taxes, insurance and maintenance; gross means more is included. Comparing a triple net rate against a gross rate as if they were the same number is the most common error in shopping for space. Common area maintenance. How it is calculated, what can be included, whether there is a cap on annual increases, and whether the tenant can audit the landlord's figures. Uncapped CAM on an older property is an open cheque. Escalations. A fixed annual percentage or an index-linked increase, compounding over the term. Model the rent in the final year, not the first. The personal guarantee. Most landlords will require one from a small business. What is negotiable is its size and shape: a burn-off after a period of good payment, a cap at a number of months' rent, or a "good guy" guarantee limited to the period until the space is surrendered clean. Ask for one of these; unlimited personal exposure for a ten-year term is a different bet from the business itself. And the exit. Assignment and sublet rights, whether the landlord can recapture, and what happens if the business is sold — which, as any buyer will confirm, determines whether the business is sellable at all. Also: who repairs the roof and the HVAC, and Florida's tax on commercial rent, which is real and belongs in the budget. This article is general information, not legal, tax or financial advice. Rules change and every deal is different — check your own case with a licensed professional. Alberto Zaltzberg — Adonait · adonait.com