Signing a commercial lease is one of the biggest financial commitments a business makes. For many Houston companies, the lease can determine profitability as much as sales and expenses. Commercial leases often include complex terms that shift costs and risk to the tenant in ways that are not obvious on a first read.
This guide outlines the most important sections business owners should review before signing.
1. Rent structure and increases
Commercial rent is rarely a flat number for the entire term. Many leases include scheduled increases or rent tied to an index.
What to review
- Base rent amount
- Timing and percentage of increases
- Any index or formula used
- Late fees and interest terms
2. Triple net and operating expenses
Many Houston commercial leases are structured as triple net, meaning the tenant pays additional costs beyond base rent. These can include property taxes, insurance, and maintenance.
What to review
- Exact list of expenses passed through to the tenant
- How charges are calculated and allocated
- Whether there is a cap on increases
- Audit rights to review landlord statements
3. Common area maintenance charges
CAM charges can significantly increase monthly cost, especially in retail centers.
What to review
- Definition of CAM expenses
- Management fees and administrative markups
- Capital improvement pass through rules
- How tenant share is calculated
4. Repairs and maintenance responsibilities
A major issue in commercial leasing is who pays for what when something breaks.
What to review
- HVAC repair and replacement
- Plumbing and electrical responsibilities
- Roof and structure obligations
- Maintenance standards and timelines
5. Build out, improvements, and permits
If you are customizing space, the lease should clearly address build out responsibilities and timelines.
What to review
- Who pays for improvements
- Tenant improvement allowance terms
- Permitting responsibility
- Ownership of improvements at lease end
- Deadlines and remedies for delays
6. Use clause and exclusivity
Your lease may limit what you can do in the space or restrict business operations.
What to review
- Permitted use description
- Restrictions on products and services
- Exclusive use rights, if negotiated
- Compliance requirements for signage and branding
7. Assignment and subleasing
Businesses change. You may need to move, sell, or restructure. Many leases restrict assignment and subleasing.
What to review
- Landlord consent requirements
- Fees for consent
- Conditions for transfer
- Release of liability after assignment
8. Default, remedies, and personal guarantees
Default provisions define what happens if the landlord claims you breached the lease.
What to review
- Events of default
- Notice and cure periods
- Acceleration of rent
- Attorney fees provisions
- Personal guarantee scope and limits
9. Renewal options and exit planning
Renewal terms and early exit provisions can protect your business long term.
What to review
- Renewal option deadlines
- Rent during renewal period
- Early termination rights, if any
- Buyout clauses or negotiated exit terms
When to have an attorney review a commercial lease
- Legal review is especially important if
- The lease includes triple net charges
- You are investing heavily in build out
- There is a personal guarantee
- Your business depends on strict permitted use terms
- The lease has aggressive default remedies
- You plan to sell the business during the lease term
A careful review can often identify hidden risks and provide opportunities to negotiate better terms before you commit.
