Choosing a commercial space is one of the most important decisions a business owner will make. But it’s not just about square footage or location — your lease is a binding legal commitment that can shape your financial stability, flexibility, and long-term growth.
Too often, entrepreneurs enter into leases without realizing the risks hidden in the fine print. From costly rent escalations to unexpected repair obligations, the terms you agree to today can have lasting impacts on your business — and, in some cases, your personal assets.
This guide explains why commercial leases demand extra caution, highlights the provisions that deserve close review, and shows how a thoughtful lease negotiation can help set your business up for success.
Why Commercial Leases Aren’t Like Residential Rentals
It’s tempting to think of a commercial lease as just a bigger, more formal version of a residential rental. In reality, they are far more complex and carry higher stakes. Unlike residential tenants, commercial tenants have limited statutory protections — which means the contract itself is your primary safeguard.
Key differences include:
- Length & Complexity – Commercial leases often run 3–10 years and can exceed 30 pages, with detailed terms that carry significant financial consequences.
- Built-In Cost Increases – Rent escalations may be tied to inflation, market trends, or fixed annual percentages — compounding your costs over time.
- Tenant Responsibilities – Commercial tenants are commonly responsible for repairs, maintenance, improvements, and sometimes even capital expenditures.
- Reduced Legal Safeguards – Residential tenants have broad statutory protections; commercial tenants must negotiate their own protections.
The takeaway: Residential leases are designed to protect tenants. Commercial leases are designed to protect landlords — unless you negotiate otherwise.
The Offer to Lease: Where Many Tenants Go Wrong
For many entrepreneurs, the first step in the leasing process is signing an Offer to Lease. At first glance, it looks like a harmless outline of rent, square footage, and lease length. In reality, it can bind you to the landlord’s standard lease — often before you’ve had the chance to review it.
Practical tip: Always review the full lease agreement with a lawyer before signing an Offer to Lease. This preserves your negotiating leverage and prevents unpleasant surprises later.
14 Critical Clauses Every Business Owner Should Review
While no two leases are identical, some clauses consistently carry the greatest financial and operational impact. Here’s what to look for:
Financial Terms
- Lease Term & Renewal Rights – Confirm dates and renewal options; without them, you risk losing your location just as your business takes off.
- Rent Structure & Escalations – Review how and when rent increases apply; even modest escalations add up significantly over time.
- Operating Costs (Additional Rent) – Taxes, insurance, and maintenance can sometimes exceed your base rent. Look for caps and clear estimates.
- Security Deposits – Understand the amount, purpose, and refund conditions.
Operational Clauses
- Lease Type – Gross (all-in), net (base rent plus expenses), or percentage (base rent plus a share of sales).
- Maintenance & Repairs – Define who handles what — from routine upkeep to major structural repairs.
- Pre-Possession Work – Clearly document landlord and tenant responsibilities, deadlines, and remedies for delays.
Business Protection Terms
- Assignment & Subleasing – Flexibility here can be crucial if you need to relocate or adjust your operations.
- Parking – Ensure you have enough spaces for staff and customers, with clear terms and costs.
- Insurance – Confirm requirements are both reasonable and obtainable.
- Default & Remedies – Know what constitutes a default, the penalties, and whether they could trigger personal liability.
- Competition & Exclusivity – These can protect your business from competitors, but must be carefully worded to avoid limiting your growth.
- Right of First Refusal – Grants you the opportunity to purchase the property if the landlord sells.
- Personal Guarantees – Understand the risks before tying your personal assets to business obligations.
Beyond the Lease: Location & Budget
Your lease is only one part of the decision. Where your business is located and the hidden costs attached to that location are equally important.
- Accessibility – Is the site convenient for both customers and suppliers?
- Visibility & Foot Traffic – High-visibility locations can save thousands in marketing costs.
- True Cost of Occupancy – Beyond rent, factor in utilities, insurance, taxes, maintenance, deposits, and infrastructure needs.
Negotiating Your Lease: What’s Possible
Almost every clause in a commercial lease is negotiable. Common areas to improve include:
- Caps on Rent Increases – To keep costs predictable.
- Tenant Improvement Allowances – Landlord contributions to help offset build-out costs.
- Exit Options – Early termination rights in case circumstances change.
- Repair & Maintenance Limits – Ensure you’re not responsible for expensive capital repairs.
A strong negotiation can transform an onerous lease into one that supports your growth.
Why a Lease Review Matters
Even a modest commercial lease can involve substantial commitments. A legal review ensures you:
- Spot one-sided or costly terms before signing
- Understand your rights and obligations in plain language
- Prevent disputes through clear, enforceable terms
- Strengthen your negotiating position
- Protect both your business and your personal assets
Bottom line: Reviewing your lease now can save you money, stress, and potential liability later.
How Main Street Law Can Help You Secure the Right Lease
At Main Street Law, we’re committed to helping Alberta business owners protect their investments and operate with confidence. Whether you’re leasing your first space or renegotiating an existing agreement, we provide clear, practical guidance every step of the way.
We can help you:
- Review and explain your commercial lease terms
- Identify and address clauses that could increase your costs or limit your flexibility
- Negotiate terms that better protect your business
- Ensure your lease aligns with your long-term goals and growth plans
Contact us today at 780-960-8100 or visit mainstreetlaw.ca/business-law-lawyer to schedule your consultation.
Make your next business move with a lease that works for you — not against you.
