7 Questions to Ask Before You Sign Any Commercial Lease

A commercial lease is often the largest contract a small business signs. It can commit you to years of payments, make you personally responsible for the debt, and decide who pays when the air conditioning fails in August. Yet many business owners sign after reading little more than the rent line and the move-in date.

Unlike residential leases, commercial leases come with far fewer built-in protections. Most terms are negotiable, which means most terms favor whoever wrote them, usually the landlord. The good news is that a handful of well-placed questions will surface almost every costly surprise before it becomes your problem.

Here are the seven questions to ask before signing a commercial lease, what a good answer sounds like, and the red flags to watch for.

This article is general information, not legal advice. Have a qualified real estate attorney review any lease before you sign.

1. What Will I Actually Pay Each Month, All In?

The advertised rent is rarely what you’ll pay. Commercial rent is often quoted as an annual rate per square foot, and many leases add separate charges on top.

Start by asking which lease structure you’re being offered:

• Gross lease: one rent payment that covers most building costs.
• Modified gross lease: base rent plus some costs, such as utilities or a share of increases.
• Triple net (NNN) lease: base rent plus your share of property taxes, insurance, and maintenance.

Then ask the landlord to put the full monthly figure in writing: base rent, operating expenses, utilities, parking, and any other recurring fees. Ask how much rent increases each year, too. A fixed 3% annual increase looks small, but it compounds over a five-year term.

Don’t forget one-time costs either. Deposits, furniture, IT setup, signage, and moving can add up quickly. This guide to hidden lease costs covers the ones owners most often miss.

Red flag: the landlord can’t or won’t give you a realistic all-in monthly estimate.

2. How Are Operating Expenses (CAM Charges) Calculated?

If your lease passes through operating expenses, often called common area maintenance (CAM) charges, this question can be worth thousands of dollars.

CAM charges typically cover shared costs like landscaping, parking lot upkeep, common area cleaning, security, and property management. They’re usually estimated at the start of the year and reconciled later, which means you may receive an extra bill once actual costs are tallied.

Ask:

• What exactly is included in CAM, and what’s excluded?
• What were the actual CAM charges for the last two or three years?
• Is there a cap on how much CAM can increase each year?
• Do I have the right to audit the landlord’s expense records?
• Are major capital improvements, like a new roof or parking lot, excluded?

Red flag: no cap on increases, no audit rights, and vague language like “all costs of operating the property.”

3. Am I Signing a Personal Guarantee, and Can It Be Limited?

Many landlords ask small business owners to personally guarantee the lease, especially when the business is new. A personal guarantee means that if your business can’t pay, the landlord can come after your personal assets, potentially for the entire remaining rent.

That’s a serious commitment, and it’s often negotiable. Ask whether the landlord will accept:

• A capped guarantee, limited to a set dollar amount or a number of months’ rent.
• A “burn-off” provision, where the guarantee expires after a period of on-time payments.
• A “good guy” clause, which limits your liability if you give proper notice, vacate, and leave the space in good condition.
• A larger security deposit in place of a personal guarantee.

Red flag: an unlimited guarantee for the full term with no path to reduce it.

4. What Exactly Am I Allowed to Use the Space For?

The permitted use clause defines what business activities you can run in the space. If it’s written too narrowly, you could be in breach simply by adding a new service.

Ask:

• Is the permitted use broad enough for where my business may go, not just where it is today?
• Does zoning allow my use, and does the space have the right certificate of occupancy?
• Will the landlord grant an exclusive use clause, so a direct competitor can’t move in next door?
• What are the rules for signage, operating hours, client parking, and deliveries?

If you see clients in person, also ask about accessibility, parking for visitors, and after-hours access.

Red flag: a permitted use clause so narrow that ordinary growth would put you in violation.

5. Who Pays for Build-Out, Repairs, and Maintenance?

Maintenance responsibilities vary widely from lease to lease, and they’re one of the most common sources of disputes.

Clarify:

• Build-out: Will the landlord provide a tenant improvement (TI) allowance? Who manages construction, and who pays if costs run over?
• Major systems: Who repairs or replaces HVAC, plumbing, electrical, and the roof? HVAC replacement alone can be a major expense if it falls on you.
• Compliance: Who pays if the space needs accessibility or code upgrades?
• Restoration: When you leave, must you remove your improvements and return the space to its original condition?

Red flag: you’re responsible for replacing major building systems in a space you don’t own.

6. What Happens If I Need to Leave Early, Grow, or Shrink?

Businesses change faster than leases do. Before you commit to a long term, understand your options if your plans change.

Ask whether the lease includes:

• An early termination option, with a defined fee so you know your exit cost upfront.
• Sublease and assignment rights, so you can transfer the space to another tenant or a buyer of your business.
• Expansion rights, such as first refusal on neighboring space.
• A relocation clause, which lets the landlord move you to another unit. If there is one, ask for comparable space and for the landlord to cover your moving costs.

Also weigh the length of the term itself. If your headcount or revenue is still uncertain, a shorter term, or a flexible office arrangement, can protect you more than a slightly lower monthly rate.

Red flag: no early exit, no sublease rights, and a long term with no flexibility.

7. What Happens at the End of the Lease?

The end of a lease can be as costly as the beginning if you don’t plan for it.

Ask:

• Renewal options: Do I have the right to renew, and how will the new rent be set?
• Notice deadlines: How far in advance must I give notice to renew or leave? Missing a deadline can lock you into an automatic renewal.
• Holdover terms: If I stay past the end date, what’s the holdover rent? It’s often 150% to 200% of the last rent.
• Security deposit: What’s the timeline and process for returning it?

Red flag: high holdover penalties combined with renewal notice deadlines buried deep in the lease.

A Quick Pre-Signing Checklist

Before you sign, make sure you have:

1. A written, all-in monthly cost estimate for the first year and the full term
2. CAM history for the last two or three years, plus any cap and audit rights
3. Clear, ideally limited, terms for any personal guarantee
4. A permitted use clause that fits your future plans
5. A written split of repair, maintenance, and build-out responsibilities
6. Defined options to exit, sublease, or expand
7. Renewal, notice, and holdover terms you understand
8. A review by a qualified real estate attorney

Don’t Be Afraid to Negotiate

Many owners assume a commercial lease is take-it-or-leave-it. In reality, landlords often expect negotiation, especially on rent increases, CAM caps, personal guarantees, and tenant improvement allowances. Even a few small changes can save you significant money over the life of the lease.

For practical ways to approach those conversations, see these negotiation tips.

And if the answers to these questions leave you uneasy, consider whether a traditional lease is the right fit right now. Many small businesses start in an all-inclusive, short-term office where rent, utilities, and maintenance are bundled into one monthly price, then move to a traditional lease once their needs are stable.

Final Thoughts

A commercial lease shapes your business for years, so it deserves more than a quick read of the rent and the start date. Asking the right questions before signing a commercial lease helps you understand the true cost, limit your personal risk, and keep the flexibility your business needs to grow.

Take your time, get everything in writing, and have an attorney review the final draft. The hour you spend asking questions now can save you years of costly surprises.