What Commercial Real Estate Attorneys Won’t Tell You About Deal-Breaking Contract Clauses
You’re about to sign a commercial lease that could make or break your business. The landlord’s attorney drafted a 47-page contract, and your broker says, “It’s standard.” But here’s what most people don’t realize: those “standard” clauses often contain deal-killers that can cost you hundreds of thousands down the road.
Most commercial real estate attorneys won’t openly discuss the problematic clauses they see repeatedly because, frankly, it’s not great for business relationships with the other side. But someone should tell you what’s really happening in these contracts.
The Hidden Clauses That Destroy Businesses
Let’s start with personal guarantees. You think you’re signing as your LLC, protecting your personal assets. Then you discover the fine print makes you personally liable for the entire lease term – even if your business fails. We’ve seen Bellevue business owners lose their homes over clauses they never understood.
Assignment restrictions are another killer. As your business grows, you may want to move or sell. But that innocent-looking clause gives your landlord complete discretion to reject any transfer. They can literally block your business sale or expansion for any reason.
Then there’s the maintenance trap. The lease says “tenant responsible for HVAC maintenance,” which sounds reasonable. Until the 20-year-old system dies, and you’re facing a $40,000 replacement bill that should have been the landlord’s responsibility.
The Compliance Nightmare Nobody Mentions
Here’s where things get really expensive. Many commercial leases include compliance clauses that hold you responsible for bringing the entire building up to current codes, not just your space. We’ve seen tenants hit with six-figure bills for building-wide ADA upgrades or fire safety improvements.
Environmental liability is even scarier. Some leases make you responsible for any environmental contamination discovered during your tenancy, regardless of when it happened. You could be paying for the previous tenant’s oil spill or chemical storage issues.
Operating expense escalations often get glossed over during negotiations, but they can be budget destroyers. That “small” annual increase compounds quickly, especially when landlords have broad discretion over what counts as an operating expense.
Why Most Attorneys Stay Quiet
The uncomfortable truth? Many attorneys prioritize closing deals over protecting their clients from worst-case scenarios. They don’t want to be seen as “deal killers” by repeatedly flagging problematic clauses that other attorneys regularly accept.
Some lawyers lack deep commercial real estate experience and miss subtle but crucial language differences. Others focus on volume but often overlook the long-term implications of specific clause combinations.
At Peterson Law, PLLC, we’ve seen too many businesses suffer from preventable contract problems. That’s why we dig into the details others skip.
What You Should Demand in Every Commercial Deal
First, cap your personal guarantee exposure. If a personal guarantee is unavoidable, limit it to a specific dollar amount and time period. Never accept unlimited personal liability for the full lease term.
Negotiate reasonable assignment rights upfront. Include language that allows assignment to qualified buyers or related entities without unreasonable landlord interference. Your future exit strategy depends on this.
Define maintenance responsibilities precisely. Separate routine maintenance from major repairs and capital improvements. Make sure you’re not inheriting someone else’s deferred maintenance problems.
Thinking about this for your situation? Let’s talk. We’ll walk you through your options—no pressure.
The Real Cost of Cutting Legal Corners
We recently helped a Seattle tech company that thought they were saving money by using their business attorney for a complex warehouse lease. The attorney overlooked a clause that would have made them responsible for structural repairs. When the building’s foundation developed issues, they faced a $180,000 bill.
Another client’s “simple” retail lease included broad co-tenancy requirements. When the anchor tenant left, they were stuck paying full rent for a space in a dying strip mall with no legal way out.
Commercial real estate contracts aren’t just longer versions of residential leases. They’re complex business agreements with implications that can last decades. The language matters, and the details can make or break your business.
Your Next Move
Don’t let a “standard” contract become your business nightmare. Whether you’re leasing, buying, or developing commercial property, you need someone who understands both the legal landscape and the business implications.
Every day you wait to address contract problems, your options become more limited and expensive. For complete information about our approach to commercial real estate law, contact us today.
Ready to protect your business interests in your next commercial real estate deal? We provide straight answers and real solutions for businesses throughout the Bellevue area and beyond.