Signing a commercial lease is one of the most critical decisions that a business can make—but it’s also one of the easiest places to overlook risk. 

Unlike residential leases, commercial lease agreements are negotiable and often heavily favor landlords unless reviewed carefully. Buried clauses, vague obligations, and hidden costs can create significant problems down the road. Below are some of the most common red flags to watch for before signing.

Unclear Maintenance and Repair Obligations

One of the most overlooked areas in a commercial lease is maintenance responsibility. Many leases state that the tenant is responsible for repairs, but the scope isn’t always clear.

  • Does “maintenance” include major systems like HVAC, plumbing, or roofing?
  • Are you required to repair damage that predates your occupancy?
  • Who pays for code upgrades or structural issues?

A vague clause could leave you on the hook for thousands in unexpected costs. Always seek clarity on whether the landlord will maintain the building’s structure and systems, and request specific language on which repairs fall to the tenant.

Hidden Costs in Operating Expenses

Many commercial leases in Massachusetts include a triple net (NNN) structure or pass-through expenses. This means the tenant pays for a share of taxes, insurance, and maintenance, sometimes without a cap.

Look out for:

  • Undefined or loosely defined “common area maintenance” (CAM) fees
  • Charges for capital improvements
  • Administrative fees or overhead percentages added on top of actual costs

Ask for a breakdown of past operating expenses and negotiate cost caps or exclusions when possible. A lease that looks affordable on paper can become a financial burden once hidden fees add up.

Early Termination Clauses That Favor the Landlord

Commercial leases often lock tenants into long terms with limited flexibility. Pay close attention to any early termination provisions.

If early termination is permitted, the lease should specify notice periods and any penalties. Ideally, tenants should negotiate limited exit options or a right to sublease in these scenarios.

Assignment and Subletting Restrictions

Your ability to assign the lease or sublet the space can make a significant difference if your business changes. Many leases require landlord approval, but some go further by allowing the landlord to terminate the lease instead of approving an assignment.

Watch for clauses that:

  • Prohibit assignment under any circumstances
  • Give the landlord complete discretion to reject subtenants
  • Require you to remain liable even after assigning the lease

Negotiating for reasonable assignment rights gives your business flexibility in case of mergers, sales, or changes in operations.

Vague Renewal Terms and Rent Increases

Leases that offer renewal options without set terms or rent caps can expose you to sharp cost increases. A clause stating that “market rent will apply” may seem fair, but it gives landlords leverage without requiring any objective measurement.

Try to negotiate:

  • Predetermined rent increases or caps
  • Defined renewal periods with clear notice requirements
  • Rights of first refusal for nearby or adjoining spaces

Clarity on future rent and renewal conditions can reduce uncertainty and protect your space in the long run.

One-Sided Default and Remedies Provisions

If the lease includes severe penalties for tenant default but gives the landlord broad leeway for delays or inaction, that’s a red flag. Check whether the lease:

  • Allows for cure periods before a default is triggered
  • Provides notice requirements before enforcement actions
  • Includes landlord obligations and tenant remedies if repairs or services are not provided

A fair lease balances both sides’ interests and anticipates issues that may arise over time.

Don’t Sign Without a Careful Review

Commercial leases are long-term commitments with real financial consequences. Before signing, take time to review every clause with a focus on hidden costs, unclear responsibilities, and limited flexibility. Have a clear understanding of your maintenance obligations, your ability to exit or transfer the lease, and what happens if your business needs change.

That’s where Seder Law can assist you. Our attorneys advise businesses throughout Worcester, Westborough, and Massachusetts on all aspects of commercial leasing. We help identify red flags, clarify confusing terms, and negotiate more favorable outcomes. Contact us today to schedule a lease review before you commit.