1. Which Lease Terms Should You Settle before Signing?
The lease should reflect what the tenant plans to do on the premises, when occupancy begins, and who pays to make the space usable. A low advertised rent offers little comfort if permits delay opening or repairs exhaust the budget.
Permitted Use and Approvals
A landlord's permission to operate a business does not replace zoning, occupancy, or licensing approval. Check the proposed use before committing to a fixed rent commencement date.
- Compare the use clause with the intended operations.
- Identify necessary permits and who must obtain them.
- Address delays or denial of essential approvals.
Improvements and Repair Duties
Build-out plans should identify who controls the work, pays contractors, and maintains building systems. A clear restoration clause also avoids disputes when the tenant moves out.
| Provision | Question to Resolve |
|---|---|
| Improvements | Who approves plans and funds the work? |
| Repairs | Who maintains HVAC and other systems? |
| Restoration | Which alterations must be removed? |
These questions also arise in commercial tenant improvement agreements.
2. How Much Will the Space Really Cost?
Base rent is only part of the commitment. Tax pass-throughs, operating expenses, insurance charges, and rent increases can change the amount paid each month. Require a workable calculation method, not merely a broad promise to pay additional rent.
Rent Increases and Pass-Throughs
Check the base year, exclusions, and supporting records for expenses charged to the tenant. Landlords benefit from clear recovery provisions; tenants need a way to verify the amounts billed.
| Charge | What to Check |
|---|---|
| Base rent | Start date, free-rent period, and increases |
| Operating expenses | Definitions, caps, and audit rights |
| Property taxes | Base year and allocation formula |
Commercial Rent Tax
Commercial Rent Tax applies to qualifying premises in Manhattan south of 96th Street. Annual gross rent of at least $250,000 can trigger the tax, subject to credits and exemptions; a return may be required above $200,000.
- Confirm the location and taxable use.
- Check annual gross rent, credits, and exemptions.
- Assign responsibility for returns and records.
Ambiguous charges can develop into a commercial lease dispute.
3. Who Bears Liability Beyond Monthly Rent?
Leasing through a company does not necessarily protect its owners when someone signs a personal guaranty. Indemnity and insurance clauses also determine who responds to injuries, damage, and third-party claims. Read these provisions together rather than in isolation.
Personal Guarantees
A full guaranty may leave the signer liable for unpaid lease obligations. A good guy guaranty may limit liability after the tenant meets stated notice and surrender conditions; it does not necessarily erase earlier debts.
- Define the debts and persons covered.
- Check notice, surrender, and payment conditions.
- Identify obligations surviving assignment or termination.
Indemnity and Insurance
The parties should match indemnity language to the risks each actually controls. Insurance requirements should address those exposures without assuming that a policy covers every contractual promise.
- Allocate injury and property-damage claims.
- Review coverage limits and additional insured terms.
- Identify exclusions and defense obligations.
Careful contract drafting and review can expose conflicts between these clauses.
4. What Happens If Plans Change or the Lease Ends?
Commercial tenants generally cannot count on automatic renewal. The contract should explain options to extend, transfer the space, cure breaches, or end the lease. Missing a notice requirement can defeat an option that otherwise appears favorable.
Renewal and Business Transfers
Check both the deadline and the required delivery method for exercising an option. Assignment or subletting restrictions deserve attention before a planned sale or reorganization.
- Confirm renewal notice dates and rent formulas.
- Check consent rules for transfers and subleases.
- Identify continuing liability after assignment.
Defaults and Recovery of Possession
Distinguish nonpayment from other breaches and check contractual cure periods. For qualifying possession claims, RPAPL Article 7 provides a court process; the precise notice and filing requirements depend on the grounds.
- Specify notices and acceptable delivery methods.
- Identify cure rights and termination triggers.
- Review remedies before seeking possession.
NYC Administrative Code § 22-902 prohibits specified harassment aimed at forcing covered commercial tenants to leave or surrender rights. Landlords considering commercial property eviction should distinguish lawful proceedings from prohibited pressure tactics.
5. Frequently Asked Questions
Can a landlord keep a commercial security deposit?
Not simply because the lease ends. The agreement governs valid claims, while General Obligations Law § 7-103 requires money held as a rental security deposit to remain trust property.
Does the Americans with Disabilities Act apply to leased storefronts?
Federal accessibility duties may apply to places of public accommodation. Lease terms can allocate work between the parties but cannot eliminate duties imposed by federal law.
Who pays a commercial leasing broker?
The brokerage agreement and other binding arrangements determine commission responsibility and timing. Both parties should check these terms before signing.
6. Discuss the Lease Terms with Sjkp before Signing
A vague expense formula or guaranty can change the economics of a lease years after move-in. SJKP's attorneys can review proposed language, identify conflicting obligations, and assist with negotiations grounded in the property's intended use. Contact SJKP before accepting terms that may be difficult to change later.
26 Oct, 2026
