Commercial Lease Red Flags: What Rockville Business Owners Should Catch Before They Sign

A commercial lease is often the largest financial commitment a small business makes outside of payroll, yet many owners sign one after a quick read and a handshake with the landlord's broker. At Grant, Riffkin & Strauss, P.C., we've reviewed enough of these leases around Rockville to know the trouble rarely shows up in the rent number on page one. It shows up in the definitions section, the fine print about "additional rent," and the clause everyone skips because it looks like boilerplate. If you're opening a storefront on Rockville Pike, expanding into a second office, or renegotiating a lease coming up for renewal, here's where the real risk tends to hide.

The Rent Number Isn't the Real Number

Most commercial leases, especially retail and office space, are structured as "triple net" or NNN leases. Base rent is just the starting point; on top of it you'll owe a proportional share of property taxes, insurance, and common area maintenance, known as CAM charges, and the language governing how those are calculated and increased varies enormously. A tenant who signs assuming $28 a square foot might actually pay $34 or $35 once CAM reconciliation hits in year one. Ask for the last two years of actual CAM statements, not just an estimate, and check whether the lease caps annual increases. A cap that excludes insurance and taxes isn't much of a cap at all.

Personal Guaranty Language Deserves a Second Read

Nearly every landlord leasing to a small or newly formed business will ask the owner to sign a personal guaranty, meaning you're personally on the hook even though the tenant on paper is your LLC. This undercuts part of the reason you formed an entity, and it's negotiable more often than tenants realize.

Worth pushing for: a burn-off provision releasing the guaranty after 18 to 24 months of on-time payments, and a cap limiting exposure to a set number of months' rent rather than the full term. Watch for language so broad that even a landlord's own default could pull the guarantor in. Landlords with some flexibility in the deal will often agree to modify this. It costs nothing to ask.

Assignment and Subletting Restrictions Can Trap a Growing Business

If your business grows, contracts, or you need to relocate within the term, the assignment and subletting clause determines your flexibility. Requiring landlord consent for any assignment or sublease is standard, but the details of that consent matter.

Look for whether consent can be "unreasonably withheld." Some leases specify consent shall not be unreasonably withheld, conditioned, or delayed; others simply say consent is required, giving the landlord total discretion. That distinction matters if you ever sell the business, since a sale usually involves transferring the lease. Also check whether a change in ownership of your entity, say bringing on a new majority partner, is itself treated as an assignment requiring consent, a detail that catches closely held businesses off guard.

Exclusivity and Use Clauses Cut Both Ways

If you're opening in a shopping center or multi-tenant building, an exclusivity clause can protect you from a landlord leasing next door to your direct competitor. These are worth requesting, particularly for restaurants, medical practices, and specialty retail where a nearby competitor genuinely affects revenue.

The flip side is the use clause restricting what you're permitted to do in the space. Written too narrowly, it can box you in if your business model shifts. A coffee shop that later wants a wine license, or a retailer that wants online fulfillment, may find the lease doesn't allow it without approval. Read the permitted use language as though your business will look somewhat different in year three, because it probably will.

Early Termination and Default Provisions

Every lease should be read with an exit in mind, even without any intention of leaving early. Ask what happens if you need to terminate before the term ends, and whether the fee is fixed or tied to remaining rent owed. Some leases allow early termination with notice and a penalty; others hold the tenant liable through the full term regardless of whether the space is re-let. Default provisions deserve the same scrutiny: what counts as a default, how much cure time you get, and whether a monetary default accelerates the entire remaining balance. These clauses skew toward the landlord by default, and a business owner has more room to negotiate them than most assume, especially before signing rather than after a dispute has started.

Why This Is Worth a Legal Review Before Signing

None of these provisions are unusual, and none of them mean a landlord is acting in bad faith. They're standard tools in commercial real estate. The problem is that most leases are drafted by the landlord's counsel with the landlord's interests as the starting point, and a tenant reading it alone doesn't always know which terms are standard and which are aggressive.

Having a lease reviewed before signing typically costs a fraction of what it costs to unwind a bad provision two years into a five-year term. Our attorneys work with business owners throughout Rockville and Montgomery County on lease review and negotiation. If you have a lease on your desk right now, it's worth a conversation before you sign it, not after.