A commercial lease can be one of the biggest commitments an Arizona business owner makes. The full agreement may create obligations that last for years. Before signing, make sure you understand what the lease requires and whether the terms support your business plans.
Glide Legal helps Arizona business owners review commercial leases, identify risks, and negotiate key terms before the lease becomes binding. If you are preparing to sign a commercial lease for your Arizona business, schedule a free consultation with Glide Legal before you sign.
What Are the Total Costs Beyond Base Rent?
The monthly rent is only one part of a commercial lease. Before signing, Arizona business owners should understand the full cost of the agreement.
A lease may require you to pay additional expenses such as:
- Common area maintenance fees
- Property taxes
- Insurance costs
- Utilities
- Repair costs
- Late fees
- Security deposits
- Scheduled rent increases
- Assignment and transfer fees
These costs can make the lease more expensive than it first appears. For example, a space with lower base rent may not be the better deal if the added expenses are high or unclear.
Before you sign, make sure you understand what you are responsible for each month, what costs may increase over time, and whether the lease clearly explains how those charges are calculated.
How Long Is the Lease, and What Renewal Options Do You Have?
The lease term controls how long your business is committed to the space. Before signing, make sure you understand the full timeline.
Start with the basic term. How long does the lease last? A longer lease may give your business stability, but it can also limit your flexibility if your needs change.
Then review what happens at the end of the lease. Some leases give you the option to renew. Others may require you to renegotiate with the landlord.
You should also look closely at the deadline for giving renewal notice. If the lease requires advance notice, missing that deadline could affect your ability to stay in the space.
Before signing, review:
- How long the initial lease lasts
- Whether you have renewal options
- When renewal notice is due
- Whether rent increases during renewal periods
- What happens if the lease expires
- What are your assignment and transfer options
A commercial lease should support your business beyond the first few months. Before you commit, make sure the term gives you enough stability without creating a commitment that may not work later.
Who Is Responsible for Repairs, Maintenance, and Improvements?
This section of the lease deserves careful attention because it can affect your costs long after you move in.
Who pays when something needs to be fixed?
The answer may not be as simple as it seems. Some leases make the landlord responsible for certain repairs. Others shift more responsibility to the tenant.
Before signing, review whether your business is responsible for repairs inside the space only, or whether the lease also makes you responsible for larger property issues.
Look Closely at Major Building Systems
Some repair obligations can be expensive. HVAC is a common example. If the air conditioning unit fails, the lease should make clear who is responsible for the repair or replacement.
The same applies to plumbing, electrical systems, doors, windows, signage, and other parts of the space.
Review Buildout and Improvement Terms
If the space needs work before you open, make sure the lease explains how improvements will be handled.
You should understand:
- Who pays for the buildout
- Who owns the improvements after they are completed
- Whether landlord approval is required
- What must be removed when the lease ends
- Is the landlord offering an allowance for you to make improvements
A buildout can be a major investment. The lease should clearly explain what happens before the work begins.
Make Sure the Responsibilities Are Clear
Repair and maintenance terms should not be vague. If the lease does not clearly explain who is responsible, disputes can happen later.
Before signing, make sure you understand what the landlord must handle and what your business is expected to maintain.
Are You Personally Guaranteeing the Lease?
A personal guarantee can make a commercial lease much more serious for a business owner.
When you sign a personal guarantee, you may become personally responsible if the business cannot meet its lease obligations. That means the landlord may be able to pursue you individually, even if the lease is for your company.
Before signing, check whether the lease includes a personal guarantee. If it does, make sure you understand how broad it is.
For example:
- Does the guarantee still apply if rent goes unpaid?
- Does it continue if the business closes or the lease ends early?
- You should also understand whether it applies to property damage or continues after the lease is assigned.
- If you assign or transfer your lease, are you still required to stay on as the guarantor?
- Is the guarantee only for monetary obligations or also for performance obligations?
Some guarantees apply to the full lease term. Others may be limited by time, amount, or specific obligations.
Before signing, make sure you understand whether you are accepting personal liability and whether the guarantee can be limited or negotiated.
What Happens If You Need to Leave Early?
Your business may sign a lease with one plan in mind, but circumstances can change. You may outgrow the space, want to sell your business, need to relocate, or decide the location no longer works.
That is why the lease should clearly explain your options before the full term ends.
If You Need to End the Lease
Some leases allow early termination, but many come with strict requirements. Before signing, review whether you have the right to leave early, how much notice you must give, and whether any fees apply.
If You Need Someone Else to Take Over
Assignment and subleasing terms are also important. These provisions may allow you to transfer the lease to another business or bring in another tenant. They are especially critical if you are selling your business, as the buyer will need to take over the lease.
The lease should explain whether landlord approval is required and whether you remain responsible after the transfer. Watch out for mandatory assignment review fees too.
If the Lease Does Not Give You Options
Leaving early can be expensive if the lease does not provide a clear path forward. If the agreement is too restrictive, your business may be responsible for rent even after you leave.
Before signing, make sure you understand what happens if the space no longer works for your business.
Frequently Asked Questions
Do I need a lawyer to review a commercial lease in Arizona?
It is highly recommended you have an attorney review your commercial lease before signing. For most businesses the commercial lease is the largest obligation the business (and owners who sign personal guarantees) will take on. Leases are complicated legal documents and failing to have the lease reviewed by a licensed Arizona attorney can result in unknown obligations that cripple your business.
What should I look for before signing a commercial lease?
At a minimum, you should review the full cost of the lease, the length of the term, renewal options, repair duties, personal guarantee language, and early exit terms. These details can affect your business long after you move into the space.
Can a commercial lease be negotiated?
Yes. Many commercial lease terms may be negotiable before signing. This can include rent structure, repair responsibilities, renewal terms, personal guarantees, and assignment rights. Leases are nearly always drafted to heavily favor the landlord, and without negotiating the terms, you could be locked in to an unfavorable contract for years.
What is a personal guarantee in a commercial lease?
A personal guarantee can make the business owner personally responsible for lease obligations. This may apply even if the lease is signed on behalf of the business.
What happens if I need to leave a commercial lease early?
The answer depends on the lease. Some agreements allow early termination, assignment, or subleasing. Others may hold the tenant responsible for rent through the rest of the lease term.
Can Glide Legal review my commercial lease before I sign?
Yes. Glide Legal can review your commercial lease, explain your obligations, identify potential concerns, and help you understand your options before signing. We can also discuss and negotiate with the landlord on your behalf.
Work With a Phoenix Business Attorney Before Signing a Commercial Lease
Before you sign a commercial lease, make sure you understand what the agreement requires. The lease should be clear. It should also support the way your business plans to use the space.
Glide Legal helps Arizona business owners review commercial leases before they become binding. Our team can explain the terms, identify potential risks, and help you decide whether certain provisions should be negotiated.
If you are preparing to sign a commercial lease for your Arizona business, schedule a free consultation with Glide Legal before you sign.
