10 Commercial Lease Clauses That Cost You Thousands
You found the space. The location is right, the size works, and the landlord seems reasonable. So you sign the lease and move in. Six months later, you're getting billed for roof repairs, a parking lot reseal, and a property management fee you never expected. Sound familiar?
Commercial leases in Florida are not like residential leases. There's no standard form, no automatic tenant protections baked into state law, and no landlord required to explain what any of it means. What you sign is what you're stuck with, often for five to ten years. That's why reviewing every clause before you sign is not optional. It's essential.
Here are ten provisions that South Florida business owners consistently overlook, and that can cost serious money.
1. Triple Net vs. Gross Lease Terms
This is the big one. In a triple net (NNN) lease, you pay base rent plus your share of property taxes, insurance, and maintenance. In a gross lease, the landlord covers those costs. Many tenants sign NNN leases without understanding what "maintenance" actually includes. Get a detailed breakdown of what CAM (common area maintenance) covers before you sign anything.
2. CAM Reconciliation Clauses
CAM charges are estimated at the start of each year. At year-end, the landlord reconciles actual costs against what you paid. If actual costs were higher, you owe the difference. Leases often allow landlords to pass through administrative fees, management fees, and capital improvements under CAM. Cap CAM increases (typically 3-5% annually) and exclude capital expenditures from the reconciliation.
3. Permitted Use Clauses
Your lease should describe your permitted use broadly. If it says "retail bakery," and you later add catering or online orders fulfilled from the space, you could be in violation. Negotiate language that covers your current business and reasonable future activities. Violating the permitted use clause can give the landlord grounds to terminate.
4. Personal Guarantee Provisions
Landlords routinely require the business owner to personally guarantee the lease. That means if the business fails, the landlord can come after your personal assets. Negotiate a "burn-off" guarantee that phases out after you've demonstrated payment history, typically one to two years. If your business is an LLC or corporation, a blanket personal guarantee eliminates the liability protection your business formation was supposed to provide.
5. Assignment and Subletting Restrictions
What happens if you want to sell your business or move to a new location? Many leases require landlord consent for any assignment or sublease, and give the landlord the right to recapture the space or take a cut of any profit. This can make your business much harder to sell. Negotiate for reasonable consent standards and limit the landlord's recapture rights.
6. Rent Escalation Clauses
Most leases include annual rent increases. These can be fixed (3% per year), tied to CPI, or tied to a fixed step schedule. CPI-tied increases can spike unexpectedly. Fixed escalations are easier to budget. Whatever structure is used, model out your total rent obligation over the full lease term before signing. A 3% annual increase on a 10-year lease adds up fast.
7. Exclusivity Clauses (or the Lack of One)
If you're a restaurant, a gym, or any business where competition in the same building matters, get an exclusivity clause. Without it, your landlord can lease the space next door to your direct competitor. Exclusivity clauses need to be carefully defined because landlords will push for narrow language.
8. Buildout and Improvement Terms
Who pays for the buildout? Who owns the improvements when the lease ends? Many leases require tenants to restore the space to its original condition at lease end, which can mean paying to tear out everything you installed. Negotiate a tenant improvement allowance from the landlord, and clarify upfront which improvements you can leave behind.
9. Holdover Provisions
If your lease expires and you stay even one day past the end date without a new agreement, a holdover clause can automatically convert your rent to 150% or even 200% of your monthly rate. Some leases convert the holdover period into a month-to-month or even a new full-term lease. Know your end date and plan accordingly.
10. Default and Cure Periods
What happens if you're late on rent or violate a lease term? The default and cure provisions determine how much time you have to fix the problem before the landlord can terminate. Florida law does provide some baseline rights for commercial tenants, but much of this is governed by the lease itself. Negotiate reasonable cure periods, typically 10 days for payment defaults and 30 days for non-monetary defaults, and make sure you get written notice before any default clock starts running.
What Florida Law Does (and Doesn't) Do for You
Florida Statute 83.19 and the broader Florida Commercial Landlord-Tenant Act (Chapter 83, Part I) govern commercial lease disputes, but they provide far fewer protections than residential tenancy law. Courts generally enforce commercial leases as written, especially between sophisticated parties. Judges will not rewrite a bad deal just because you didn't understand what you signed.
If a dispute does arise, it often ends up in commercial litigation, which is expensive and time-consuming. The better play is always to negotiate the lease aggressively before you sign.
Before You Sign, Get a Second Set of Eyes
A commercial lease is one of the most significant financial commitments your business will make. Rent is often the second-largest expense after payroll. Yet most business owners spend more time picking out furniture than reviewing the lease terms.
If you're already in a dispute with a landlord over lease terms, repairs, CAM charges, or a wrongful termination, that's a real estate litigation matter and you should not try to navigate it alone.
And if you're structuring or growing your business, it's worth thinking about how your entity structure affects your exposure on personal guarantees. The LLC vs S-Corp guide is a good starting point if you haven't locked in the right structure yet.
Talk to The Kogan Firm Before You Sign
At The Kogan Firm, we review commercial leases for South Florida business owners and help negotiate terms that protect you for the life of the agreement. We also handle disputes when landlords don't hold up their end of the deal.
If you're about to sign a commercial lease or you're already dealing with a landlord problem, contact us for a free consultation. There's no obligation, and it's a lot cheaper than finding out what those clauses mean after the fact.
Contact us today or get started through our case intake form.
This post is for informational purposes only and does not constitute legal advice.
