What Business Tenants Should Know

When entering into a commercial lease, it’s important to understand that a business tenant’s rights are largely shaped by the terms of the lease itself—making careful review and negotiation essential. Unlike residential renters, who enjoy various housing-law protections, commercial tenants generally have very few legal safeguards beyond what’s in the lease. As a result, leases drafted by landlords often heavily favor their interests, making it crucial for tenants to negotiate key terms up front. Whether you’re renting a storefront or an office suite, understanding your rights and obligations in the lease – from maintenance duties to exit options – can prevent costly surprises down the road.

Certain lease provisions can significantly impact a tenant’s flexibility, risk exposure, and overall business operations. Common areas to focus on include:

• Repair and Maintenance Responsibilities. Repair and maintenance obligations determine who fixes issues like HVAC or structural problems and, unlike residential leases, commercial leases often try to shift more of this burden to tenants. Since there’s usually no default obligation for the landlord to maintain a “habitable” space, if you want the landlord to handle certain repairs or meet specific standards, those obligations must be written into the lease.
• Early Termination Clauses. Sometimes, things don’t go as planned and your business may need to consider moving or closing before the lease ends. An early termination clause, allows an exit or “bail-out” option to end the lease early if certain business conditions change (often this comes with notice requirements or penalties for ending the lease early). Renewal Options: Unlike home rentals that might renew automatically, a commercial tenant usually must negotiate the right to extend the lease term on preset conditions.
• Subletting and Assignment Rights:  Most commercial leases restrict transferring the lease without landlord consent but negotiating reasonable transfer rights can preserve flexibility if you need to downsize or relocate.
• Exclusivity Clauses: In retail settings, an exclusivity clause can protect you from having a direct competitor move into the same complex and safeguards your customer base.
• Default Provisions. This is important to consider because commercial landlords can often pursue eviction more quickly and aggressively than residential landlords—sometimes even changing the locks for nonpayment without the delays common in residential cases.

All these provisions – from who handles repairs to whether you can sublease or renew – are negotiable, and a savvy tenant will address them before signing.

The takeaway for any U.S. commercial tenant is to be proactive: review your lease thoroughly, negotiate for protections and fair terms, and don’t assume it works like a residential lease. Many business tenants overlook details like default clauses, personal guarantees, or how security deposits are handled, only to find out later that the lease heavily favors the landlord. By understanding and securing your rights in the lease, you’ll avoid pitfalls and ensure your tenancy supports your business’s success.