The rent number is usually the first thing a business owner looks at when reviewing a commercial lease.
It should not be the last thing.
A commercial lease can affect your cash flow, your ability to sell the business, your exposure to repair costs and, in some cases, your personal assets. Many of those consequences live outside the base-rent provision.
So before signing, ask a better question than “Can I afford the rent?”
Ask: “What else am I agreeing to pay, guarantee or give up?”
A lease may involve more than base rent. Depending on the structure, the tenant may also pay a share of taxes, insurance, common-area maintenance and other operating expenses.
For a business owner, the important task is to understand how those costs are calculated and whether the lease gives the landlord broad discretion to increase them.
Do not assume that a “3% to 5% cap” is a universal rule. It is often a negotiation point, and the definition of controllable expenses matters just as much as the percentage.
A personal guarantee can turn a business obligation into a personal exposure.
Ask exactly what is guaranteed, how long the guarantee lasts and what happens if the business closes, sells, assigns the lease or stops operating.
A negotiated “good guy” structure or a burn-off provision may be worth discussing, but neither should be treated as automatic. The actual language controls.
Who replaces the air-conditioning unit? Who pays for plumbing? What about structural work? What happens after years of wear and tear?
The answer should come from the lease, not from assumptions about what a landlord “normally” pays.
California commercial leases can allocate repair and maintenance responsibilities by contract, subject to applicable law. That makes the allocation language critical.
An illustrative scenario: a restaurant signs a five-year lease without examining the repair provisions. A major HVAC system fails. The tenant then discovers that its “maintenance” obligation was drafted broadly enough to create a costly dispute over replacement responsibility.
The problem was not the HVAC unit. It was the lease language written five years earlier.
What happens if the business is sold?
Can the lease be assigned? Can you sublet? Can the landlord withhold consent? Is consent subject to a reasonableness standard? Does the lease give the landlord a right to recapture the space?
Those clauses can materially affect the value of a business when an owner wants to sell or restructure.
One of the most useful negotiating questions is:
“Will this lease still work if my business changes?”
A narrow permitted-use clause, rigid signage restrictions, limited assignment rights or expensive restoration obligations can become problems later—even if the space is perfect today.
A good commercial lease review is therefore not just document proofreading. It is business-risk planning.
What lease term would you negotiate hardest: operating expenses, personal guarantees, repair obligations or the right to exit?
A commercial lease is more than a document that gives your business a place to operate. It can determine how much you really pay for the space, how much personal risk you carry, who pays when expensive equipment fails and how easily you can change direction later.
Book a commercial-lease review with Lum Law Group before signing. We can review the lease from the perspective of the business—not just the landlord’s preferred wording—including occupancy costs, guarantees, repairs, assignment rights, permitted use and exit provisions.
A. Justin Lum has been practicing law since 1993, with more than 30 years of experience serving clients across a wide range of legal matters. A graduate of the University of California, Berkeley and UC Davis School of Law, he is also a past President of the Southern California Chinese Lawyers Association, continuing a proud family legacy of leadership in the legal profession.
At Lum Law Group, we frequently speak with individuals and business owners who have already invested significant time and resources into their goals—whether launching a new brand or navigating a complex immigration journey—before discovering unforeseen legal hurdles. Addressing these matters early in your planning process provides much greater flexibility. It empowers you to make informed decisions before committing substantial financial resources or risking unnecessary delays. Because every legal situation is unique, developing the right strategy requires a careful review of your specific circumstances, business objectives, or immigration history. Whether you need general counsel to protect your growing enterprise or strategic guidance to secure your family’s future in the United States, proactive legal planning is always your strongest asset.
If you were signing a commercial lease today, which term would you negotiate hardest: total occupancy cost, personal guarantee, repairs or the ability to exit?
