Key Lease Terms SMBs Should Negotiate to Avoid Future Legal Trouble 

Commercial leases should never be one-size-fits-all. Small and midsize business (SMB) tenants often assume lease terms cannot be negotiated — but in many cases, they can. Landlords may be open to negotiating key provisions, especially when dealing with financially stable tenants or those committing to longer terms. Customizing lease terms to fit your business objectives can help prevent future legal and financial headaches. 

This article highlights key lease clauses that SMB tenants should review and, where possible, negotiate. Understanding these terms—and their long-term implications—will help you to safeguard your business operations and avoid future disputes. 

1. Rent and Additional Charges 

Commercial leases often involve more than just a base rent calculated on square footage. Depending on the lease type, tenants may also be responsible for property taxes, insurance premiums, utilities, and common area maintenance (CAM) fees. A net lease passes most of these expenses on to the tenant, while a gross lease rolls them into one fixed (usually higher) monthly payment. 

Tenants seeking stable and predictable costs may prefer gross leases, while landlords typically favor net leases to shift rising costs to tenants. Negotiation points include the lease type, whether rent increases annually (and by how much), and what expenses are excluded. For instance, we’ve seen cases where tenants unknowingly agreed to uncapped CAM fees and were hit with a 30% rent hike mid-lease due to unexpected roof repairs. 

How to Avoid Future Legal Trouble:
Vague rent formulas or hidden pass-through expenses can lead to disputes. Request a clear breakdown of all rent components—base rent, CAM, insurance, taxes—and document any negotiated caps or exclusions directly in the lease. Tenants should also ask for audit rights to review expense calculations. 

2. Permitted and Exclusive Use Clauses 

Permitted Use clauses define how the tenant may operate in the leased space. Landlords often prefer narrow restrictions to control the property’s character, but overly restrictive language can limit a tenant’s ability to pivot, expand services, or respond to market trends.  

Exclusive Use clauses, on the other hand, protect tenants by preventing the landlord from leasing nearby space to direct competitors which could adversely impact a business’s sales. These clauses are common in shopping centers and multi-tenant buildings. These clauses must be carefully drafted and enforceable under local zoning and lease conditions to be effective. 

How to Avoid Future Legal Trouble:
Narrow permitted use clauses can become grounds for default if a tenant modifies its operations without express permission. Tenants should negotiate broader language, rather than hyper-specific definitions (e.g., “retail sale of food and beverages”). 

For exclusive use clauses, ensure competitor definitions are clear and that remedies for violations are spelled out (e.g., rent reductions or termination rights). Five Key Commercial Lease Provisions for Commercial Tenants examines use clauses in greater detail. 

3. Repair and Maintenance Responsibilities 

In Florida, commercial tenants are presumed to bear the cost of repairs unless the lease says otherwise. This includes maintenance of HVAC systems, plumbing, and even structural components. Request an HVAC inspection before signing to understand your long-term maintenance exposure. 

Landlords benefit from clearly allocating responsibility. This is particularly important when it comes to capital repairs or systems shared among tenants. 

How to Avoid Future Legal Trouble:
Disputes often arise from ambiguous repair clauses or unexpected costs. Leases should specify which party is responsible for each major system and whether repair obligations include replacements. Include response timelines, reporting requirements, and whether the landlord must approve contractor work. For more, see You Break It, You Fix It: Commercial Landlords’ Obligations For Repairs Of The Premises. 

4. Alterations and Improvements 

Most tenants need to modify the space to suit their operations—installing fixtures, walls, signage, or tech infrastructure. Lease terms should clarify what constitutes a “material alteration”, when landlord approval is required, and what happens to improvements when the lease ends. 

Landlords may want to retain ownership of improvements, particularly if they enhance the property’s value. Tenants, however, may prefer to remove custom installations or ensure compensation if the landlord keeps them. If the lease is silent, most improvements revert to the landlord at the end of the term, unless they are considered trade fixtures. 

How to Avoid Future Legal Trouble:
Define the approval process in the lease, including timelines for landlord responses. Specify ownership of alterations at lease end, and whether tenants must restore the premises to its original condition.  

5. Assignment and Subletting 

As businesses grow, downsize, or relocate, tenants may need the flexibility to assign the lease or sublet the space. Most leases require landlord approval, but tenants should negotiate for “reasonable consent” language—so the landlord cannot unreasonably block transfers. 

For instance, a SMB selling their business may need to assign the lease to the buyer. Without assignment rights, that deal could collapse.  

How to Avoid Future Legal Trouble:
Clarify what “reasonable” means and list permissible reasons for denial (e.g., poor credit). Also, negotiate whether the original tenant remains liable after assignment, or if liability transfers fully to the assignee. 

6. Casualty Damage, Natural Disasters, and Force Majeure 

Florida businesses must account for hurricanes, flooding, and storm-related closures. A casualty clause governs what happens when the property becomes damaged or unusable. It should address rent abatement during repairs, deadlines for restoration, and termination rights if the space is uninhabitable. 

Since the COVID-19 pandemic, force majeure clauses have also evolved to include public health emergencies, supply chain disruptions, and government shutdowns. Navigating Commercial Leases in a Post-Pandemic World, examines the impact of the pandemic on commercial lease agreements in greater depth.  

How to Avoid Future Legal Trouble:
Ambiguous or outdated casualty provisions can create major conflicts. Define what events trigger rent relief, who controls repair timelines, and whether tenants can terminate if downtime exceeds a set period. In force majeure clauses, consider rent deferment or abatement language and whether tenants must use government relief funds toward lease obligations. 

7. Purchase Options (ROFO, ROFR, and Option to Buy) 

Some commercial tenants may wish to secure long-term control over their premises by negotiating a Right of First Offer (ROFO), Right of First Refusal (ROFR), or even a fixed Option to Purchase. These clauses allow tenants to purchase the property under certain conditions. 

A ROFO gives tenants first dibs before the landlord markets the property; a ROFR lets the tenant match a third-party offer; a unilateral option allows tenants to buy at a set price regardless of outside interest. 

How to Avoid Future Legal Trouble:
Ensure these clauses are enforceable by clearly defining how purchase prices are set (e.g., appraised value or fixed rate), how and when notice must be given, and the timeframe for responding. Tenants may also want the right to record a Memorandum of Option to protect their interest.  Understanding Your Options: Three Types of Tenant Options to Purchase that May Be Included in Commercial Leases, explores these options in greater detail. 

8. Lease Renewal Clauses 

Renewal clauses provide continuity for tenants whose businesses are location dependent. They should spell out the notice period required, rent for the renewal term, and whether any new terms will apply. 

Landlords often prefer market-rate adjustments; tenants may seek caps or predetermined increases. 

How to Avoid Future Legal Trouble:
Avoid vague language like “at the then prevailing market rate for comparable commercial properties”. Courts are reluctant to enforce renewal options without clear and definite rent terms and deadlines. Tenants should document how rent will be calculated and any procedures for dispute resolution if the parties disagree. For more, see our article Lease Agreements: Beware of the Lease Renewal Language. 

Conclusion 

A commercial lease is more than just a rental agreement—it is a strategic business document that can shape your company’s financial stability and operational flexibility. By understanding and negotiating key lease provisions, SMBs can avoid many of the legal and financial pitfalls that arise when clauses are overlooked or left vague. Whether it’s clarifying repair responsibilities, expanding use rights, or securing a renewal clause that supports your growth, even small, negotiated changes can significantly impact your business’s financial future. Legal guidance upfront helps you spot red flags before they become costly disputes.   Before signing, consult with legal counsel to review the lease’s terms in detail. Even modest changes can make a major difference if disputes or business changes occur later. At Jimerson Birr, we help Florida businesses negotiate leases and lease renewals, to help them tailor their lease to protect their business’s future. Contact us to schedule a confidential consultation.