General legal information, published for everyone. It does not apply the law to anyone’s particular situation and is not legal advice. Laws change and differ by place; check the primary sources below.
Quick summary
- Most consumer-style tenant protections, such as the implied warranty of habitability and caps on security deposits, generally do not apply to commercial leases.
- Rent structure (gross, modified gross, or net) determines who pays taxes, insurance, and maintenance.
- Clauses on use, assignment and subletting, repairs, renewal, and default carry most of the legal risk.
- Small-business leases often include a personal guarantee from the owner.
- Accessibility obligations under the ADA apply to both landlord and tenant, and the lease may allocate them between the two.
What it means
Courts generally treat commercial tenants as businesses able to negotiate for themselves. As a result, the written lease is usually the main source of each side's rights. Terms that would be prohibited in a residential lease, such as broad waivers of the landlord's repair duties, are often enforceable in a commercial one.
State law still matters: it governs how leases are interpreted, what a landlord must do to evict or recover possession, whether a landlord must try to re-let the space after a tenant leaves (the "duty to mitigate"), and some statutory rights that cannot be waived.
Key terms
- Gross lease
- The tenant pays a single rent; the landlord pays property taxes, insurance, and building operating costs.
- Net lease (NNN)
- The tenant pays base rent plus a share of property taxes, insurance, and maintenance. In a triple-net lease, the tenant pays all three.
- Common area maintenance (CAM)
- Charges for operating shared areas such as lobbies, parking lots, and landscaping, passed through to tenants.
- Use clause
- The clause limiting what business the tenant may conduct in the space.
- Exclusive clause
- A landlord's promise not to lease other space in the property to a competing business.
- Assignment and subletting
- Transferring the lease (assignment) or renting part or all of the space to another business (sublease), usually requiring landlord consent.
- Personal guarantee
- A promise by an individual, usually the business owner, to pay the lease obligations if the business does not.
- SNDA
- Subordination, non-disturbance and attornment agreement: sets the tenant's rights if the landlord's lender forecloses.
- Estoppel certificate
- A tenant's signed statement confirming the lease terms, often requested when the property is sold or refinanced.
How the law works
Rent and operating costs
Rent can be fixed, can escalate by set amounts or an index such as CPI, and in retail leases can include percentage rent based on the tenant's sales. In net leases, the tenant also pays a share of operating expenses, usually estimated monthly and reconciled annually. Leases commonly define which costs can be passed through, whether capital expenses are included, and whether the tenant may audit the landlord's records.
Repairs, maintenance, and condition of the space
The lease allocates responsibility for structural elements, roofs, HVAC systems, and interior repairs. Many commercial leases deliver the space "as is," with any improvements described in a work letter that sets out who builds what and who pays. Without lease language, default rules on repairs vary by state, and commercial tenants generally cannot rely on the implied warranty of habitability that protects residential tenants.
Term, renewal, and early termination
Commercial terms are often multi-year. Renewal options typically require written notice within a set window before the term ends. Early-termination rights exist only if the lease grants them. A tenant who leaves early can remain liable for rent; whether the landlord must try to re-let the space to reduce that liability depends on state law and the lease.
Assignment, subletting, and change of control
Most leases require landlord consent to assign or sublet. Leases often say whether consent may be withheld in the landlord's discretion or not unreasonably withheld, and some treat a sale of the tenant company's ownership as an assignment. These clauses matter when a business is sold or wants to downsize.
Default and remedies
Leases define events of default (such as unpaid rent) and any notice and cure periods. Landlord remedies can include terminating the lease, recovering possession through the court process state law requires, collecting past-due and future rent, and drawing on the security deposit or letter of credit. Some states allow commercial landlords limited self-help remedies; others require court proceedings.
Accessibility (ADA)
Under the Americans with Disabilities Act, both a landlord that owns a place of public accommodation and a tenant that operates one are responsible for compliance, and they may allocate responsibility between themselves by lease (28 C.F.R. § 36.201(b)). That allocation is effective between the parties but does not limit either party's obligations to the public.
Examples
Hypothetical example
A café comparing two offers
A café owner compares a gross lease at a higher rent with a triple-net lease at a lower base rent. The net lease also passes through property taxes, insurance, and CAM, which can rise each year, so the total occupancy cost may be similar or higher.
Hypothetical example
Selling a business with a lease
A retailer wants to sell its business. The lease requires landlord consent for any assignment and treats a transfer of more than 50 percent of ownership as an assignment, so the sale may require the landlord's approval regardless of how it is structured.
Common questions
Are commercial security deposits limited by law?
Most state security-deposit statutes apply only to residential leases. Commercial deposits are usually governed by the lease terms, although a few states regulate them.
Does a commercial landlord have to make repairs?
It depends on the lease. Commercial leases commonly assign repairs in detail; where the lease is silent, state default rules apply and vary.
Can a commercial landlord lock out a tenant?
Some states permit limited self-help repossession of commercial space after a default if the lease allows it and it is done peaceably; many require court proceedings. Residential lockouts are prohibited in most states.
Is a personal guarantee limited to the business's assets?
No. A personal guarantee makes the guarantor individually responsible for the obligations it covers, which can reach personal assets. Some guarantees are capped or limited to a period of time ("good-guy" guarantees).
Important distinctions
Commercial vs. residential leases
Residential leases are heavily regulated by statute to protect tenants; commercial leases are mostly governed by their negotiated terms. Rules on deposits, habitability, notice, and eviction often differ.
Assignment vs. sublease
In an assignment, the new tenant steps into the lease directly with the landlord. In a sublease, the original tenant becomes a landlord to the subtenant and usually remains liable to the original landlord.
Primary sources
- Regulation28 C.F.R. § 36.201ADA Title III — general prohibition; landlord and tenant responsibilitiesUnited States (federal)Landlords and tenants of public accommodations are both covered and may allocate responsibility by lease.
- Agency guidanceU.S. Small Business Administration — Pick your business locationUnited States (federal)Overview of leasing considerations for small businesses.
Secondary references
- Secondary sourceRestatement (Second) of Property: Landlord and Tenant (1977)United States (general)Secondary authority on lease law; courts adopt its rules selectively.
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- Last updated
- Oct 8, 2026
- Jurisdiction
- United States (general; state law governs)
- Written by
- House Legal editorial (AI-assisted)