Signing a commercial lease is one of the biggest commitments a business owner can make. Unlike residential leases, which tend to be standardized and short-term, commercial leases are highly negotiable, legally complex, and packed with obligations that can impact your bottom line for years. One misstep can cost you tens of thousands of dollars—or even force your business to shut its doors.
At Abdou Law, our commercial lease attorneys help clients throughout New Jersey negotiate and review commercial leases that protect their financial and legal interests. Here are some of the most common (and costly) mistakes we see and how our commercial real estate attorneys avoid them.
1. Not Negotiating Key Terms
Many tenants assume a commercial lease is a “take-it-or-leave-it” situation. But that couldn’t be further from the truth. Nearly every term of a commercial lease from rent amount to signage rights can be negotiated. Failing to do so often results in tenants locking themselves into rigid agreements that don’t support their long-term business goals.
Examples of negotiable terms include:
- Rent abatement during construction or move-in
- Tenant improvement allowances
- Exclusivity clauses (to prevent competitors from leasing nearby)
- Signage and branding rights
- Free rent periods
- “Sunsetting” personal guarantees
Why this matters: If you don’t negotiate upfront, you might find yourself paying full rent before you’re even open for business or discover a competitor moved in next door.
2. Overlooking CAM Charges (Common Area Maintenance)
CAM charges are often an unpleasant surprise for commercial tenants. These are additional fees you may be required to pay to maintain shared areas items like landscaping, snow removal, security, parking lot repairs, and property taxes.
Many leases don’t just allow for CAM charges—they also allow for uncapped increases, meaning you could be stuck with a significant and unpredictable bill.
What our commercial lease lawyers look for:
- Detailed CAM breakdown in the lease
- Language that allows annual audits of CAM expenses
- A cap on annual increases (“CAM cap”)
Why this matters: We’ve seen tenants go from a $2,000/month lease to paying $3,000+ once CAM charges were tacked on. Always ask for transparency.
3. Ignoring Exit Clauses and Renewal Terms
It’s easy to focus on getting into a space but what happens if you need to leave? Or stay longer? Without clearly defined exit and renewal clauses, you may be stuck in an expensive lease you can’t escape or be forced to vacate when your business is finally thriving.
Considerations include:
- Early termination options
- Subletting permissions
- Automatic renewal clauses
- Holdover penalties (fees for staying past your lease end date)
Real-world risk: In an economic downturn, you don’t want a lease that has no flexibility. You don’t want to be on the hook for years of rent you can’t afford.
4. Not Clarifying Who’s Responsible for Repairs
Many commercial leases, especially “triple net” leases, pass repair and maintenance obligations on to the tenant. If your lease isn’t crystal clear, you could find yourself paying for things like HVAC replacement, plumbing issues, or even roof repairs on a building you don’t own.
Smart steps our lawyers take:
- Define landlord vs. tenant responsibilities in writing
- Request a property condition report before signing
- Negotiate shared responsibility for large capital expenses
Why this matters: As a new business owner, you do not want to be billed for an HVAC unit that failed just six months into your lease because the contract made you responsible for “all systems.”Hiring an attorney to review your commercial lease can prevent situations like this from happening.
5. Failing to Consider Zoning and Permits
A landlord may be willing to lease you a space but that doesn’t mean your business can legally operate there. Zoning laws, municipal ordinances, and local licensing rules can prevent certain uses, even if the space seems perfect.
Checklist:
- Confirm zoning matches your business type
- Check for required municipal permits
- Review any restrictions on hours, signage, or alcohol sales
What can go wrong: We’ve seen businesses sign multi-year leases only to be shut down by the town weeks later because their use wasn’t approved under local code.
6. Assuming Verbal Promises Will Be Honored
If it’s not in writing, it doesn’t exist. Many tenants rely on verbal assurances from landlords about renovations, concessions, or flexibility, only to find those promises conveniently forgotten when a problem arises or the building changes hands.
Legal protection tips:
- Request all verbal promises be written into the lease
- Use addendums or side letters for last-minute changes
- Get timelines and completion dates in writing
Worst-case scenario: A prime example of this could be that damage from a major water leak was verbally promised to be fixed before move-in, but it wasn’t. The lease made no mention of the repair. As the tenant, you have no legal recourse and would have to pay out of pocket for the repair to make the space suitable.
7. Not Reviewing Insurance Requirements
Many leases require tenants to carry specific types of insurance, such as general liability, property, or business interruption coverage. Failing to understand or meet these requirements can leave you underinsured or in breach of contract.
Key questions:
- What are the minimum coverage limits?
- Is the landlord listed as an “additional insured”?
- What happens in the event of a claim?
Why this matters: If you experience a fire or flood and don’t have the right policy or fail to name your landlord you could be responsible for not just your damages, but theirs too.
8. Underestimating Personal Guarantees
Many landlords require a personal guarantee, which means that even if your business fails, you’re still personally responsible for paying rent. This can put your home, savings, and credit at risk.
Options we negotiate:
- Limited guarantees (i.e., for the first year only)
- Good guy guarantees (you’re liable only until you vacate)
- Higher security deposits instead of a full personal guarantee
Why this matters: If you end up filing personal bankruptcy after your business folded and the landlord can still bring you to court for the remainder of the lease term.
Contact Our NJ Commercial Lease Attorney
A commercial lease is more than just a legal document, it’s a roadmap for your business’s future. The wrong terms can trap you in a bad deal that drains your finances, limits your flexibility, and puts your personal assets at risk.
At Abdou Law, we’ve helped businesses of all sizes understand their rights and avoid the fine-print pitfalls. Before you sign a lease, give us a call. We’ll review the proposed lease agreement, explain every clause, and help you negotiate a deal that protects your business from day one. Contact Abdou Law today to schedule a commercial lease consultation.
