What to check before you sign a lease

A commercial lease is usually the longest and most expensive contract a small business signs. These are the clauses that cause the most trouble, what each one actually means, and what to ask the landlord to change.

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Six lease clauses worth reading twice

Personal guarantee

You promise to pay personally, not just through the company. If the business closes, the landlord can still pursue you for the rest of the term, and that can reach your savings and your home.

What to ask: Ask for a cap — a fixed sum, or a guarantee that ends once you hand back the keys with rent paid up to date. Some landlords will let it fall away after 12 to 24 months of on-time payment.

Auto-renewal and the notice window

The lease rolls into another term unless you give notice inside a specific window, which can open six to twelve months before the end. Miss it and you owe another full term.

What to ask: Ask to shorten the window to 30 to 90 days, and to have the landlord send a written reminder before it opens.

Rent escalation

Rent rises every year by a fixed percentage or an index. Wording like "the greater of 4% or CPI" compounds and never moves down, so the final years can cost far more than you modelled.

What to ask: Ask for a flat percentage you can budget for, or a ceiling on the index so a bad inflation year cannot reset your cost base.

Repair and dilapidation obligations

A full repairing obligation, or a duty to return the space "in good condition", can make you responsible for problems that predate your tenancy — an ageing roof or a failing HVAC unit you never damaged.

What to ask: Ask to attach a photographed schedule of condition at the start, and to limit your obligation to returning the space no worse than that record, with fair wear and tear excluded.

Conditions attached to the break clause

An early exit right often only works if you satisfy conditions. "All covenants performed" is close to impossible to satisfy in practice, and it is the usual reason a break attempt fails.

What to ask: Ask for the break to depend only on paying rent due up to the break date and giving vacant possession — nothing else.

Assignment and subletting restrictions

If you need to move, downsize, or sell the business, you may need the landlord's consent. Where consent is at their absolute discretion, they can simply say no, and you can stay liable even after assigning.

What to ask: Ask for consent "not to be unreasonably withheld or delayed", with a deadline for the landlord to respond.

What a finding looks like

Example · Commercial lease · General analysis

HIGH — The break clause may not actually let you leave

The Tenant shall not be entitled to exercise the break right unless, at the Break Date, the Tenant has performed and observed all of the covenants contained in this Lease.

"All of the covenants" includes small decoration and repair items. A landlord can point to one unrepaired detail, refuse the break, and leave you liable for the remainder of the term.

What to ask: Ask for the break to be conditional only on paying the rent due to the break date and giving vacant possession.

Upload the lease they sent. AxiomRisk quotes the exact sentences that carry these risks and tells you what to ask for.

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This page is general information, not legal advice, and it does not create a lawyer-client relationship. Every contract and every jurisdiction differs — review anything that matters with a qualified lawyer before you sign.