Leasing & Tenant Education
Before You Sign a Commercial Lease, Ask These 10 Questions
The questions that matter most are often buried in the provisions nobody discusses during the first showing.
Key takeaways
Due diligence begins before the attorney receives the draft
A commercial lease is a business operating agreement in addition to a real estate document.
Ten questions worth getting answered
What exactly is included in rent?
Look for asymmetry
A provision may grant the landlord broad discretion over operating expenses while giving the tenant no right to review supporting records.
Use a multidisciplinary review
The broker assesses commercial comparability, counsel interprets contractual risk, the architect or contractor confirms fit-out feasibility, and the accountant evaluates long-term financial impact.
Due diligence begins before the attorney receives the draft
A commercial lease is a business operating agreement in addition to a real estate document. It determines occupancy costs, flexibility, repair exposure, and what happens when the business grows, contracts, changes owners, or confronts unforeseen conditions. An attractive space can still carry terms that do not match the occupant’s risk tolerance.
The broker assesses commercial comparability, counsel interprets contractual risk, the architect or contractor confirms fit-out feasibility, and the accountant evaluates long-term financial impact.
Ten questions worth getting answered
What exactly is included in rent? How is the area measured? Is the proposed use allowed under local zoning and building rules? When does rent begin? Who maintains and replaces HVAC, roof, structure, and other systems? Who pays for improvements and their permitting? How are annual increases calculated? Can the tenant assign or sublease? What restoration is required at departure? What options or protections apply at renewal? Each question should lead to a documented response, not a verbal assurance.
Look for asymmetry
A provision may grant the landlord broad discretion over operating expenses while giving the tenant no right to review supporting records. An option may sound valuable but require notice many months before expiration. A landlord-funded improvement may be recoverable through additional rent. Review definitions, deadlines, remedies, personal guarantees, insurance, and default provisions as a system rather than separately.
Use a multidisciplinary review
The broker assesses commercial comparability, counsel interprets contractual risk, the architect or contractor confirms fit-out feasibility, and the accountant evaluates long-term financial impact. No single participant replaces the others. The result is a lease that supports the business instead of merely occupying a location.
Practical points to consider
- Use one written comparison sheet for all lease proposals.
- Have the permitted-use clause and commencement conditions reviewed before execution.
- Record all critical notice dates in a calendar once the lease is signed.
Questions & answers
Is a letter of intent binding?
It depends on its wording and jurisdiction. Counsel should identify any binding provisions before signature.
Can a tenant negotiate repair obligations?
Often yes, but the outcome depends on the asset, bargaining position, and contract.
Is professional review necessary?
Commercial commitments can be significant; legal, financial, and technical review is prudent.
Helpful Resources
- SBA: Pick Your Business Location: Explore location-dependent expenses, zoning, taxes, and business requirements.
- Massachusetts State Building Code: For Massachusetts properties, review official building code information and confirm project-specific requirements with the local building department.
- Connecticut State Building Code: For Connecticut properties, review official building code information and confirm project-specific requirements with the local building department.
Important information
This article provides general information, not legal, engineering, tax, valuation, or investment advice. Numerical examples are illustrative unless otherwise stated. Consult qualified professionals about your specific property or transaction.
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