The Ultimate Guide:
How to Review a Lease

Step 1: The Financial Audit

Start with the base rent and escalation structure. Is it a fixed 3% annual increase, or tied to the CPI (Consumer Price Index)? CPI-based increases can be unpredictable and costly in high-inflation environments.

Step 2: The CAM & Operating Expense Audit

Common Area Maintenance (CAM) is where many tenants lose money. Review the "Operating Expenses" definition. It should exclude capital improvements (like a new roof) and landlord-specific costs (like marketing the building).

Always request an "audit right" that allows you to review the landlord's books if you suspect overcharging.

Step 3: The Control & Flexibility Audit

Can you sell your business? Can you sublease the space if you need to downsize? Look for "Assignment and Subletting" clauses. The landlord should not be able to "unreasonably" withhold consent.

Step 4: The Liability Audit

Identify every "Default" trigger. Some leases allow the landlord to terminate for a "non-monetary" default, like failing to provide an insurance certificate on time. These triggers should have a "notice and cure" period of at least 10-30 days.

Step 5: The Exit Audit

What happens when the lease ends? If you stay one day past the expiration, you might be in "Holdover," which often carries a 150-200% rent penalty. Review the renewal options and notice requirements (typically 6-12 months in advance).