Commercial lease agreements are more than just standard forms — they are dynamic legal documents shaping landlord-tenant relationships’ long-term success. Whether you are the property owner or a tenant, it is critical to regularly review and update your lease form to ensure compliance with current law, evolving business needs, changes to the make-up of the property and overall market conditions. Even well-drafted leases can become outdated or expose parties to an unnecessary risk of dispute if left unchecked over time. A modest investment in legal fees up front to assist in the review could protect the landlord or tenant from significant losses in the future.
Sabrina Beavens
Below are several provisions that deserve particular attention during periodic reviews.
Rent and escalation clauses
Regular reviews should focus on whether the base rent remains competitive within the current market and whether escalation clauses, such as annual increases or CPI adjustments, remain appropriate. Many older leases use outdated formulas that may no longer reflect economic realities or industry practices. Landlords should also consider whether to include operating expense passthroughs, percentage rent, or other forms of rent calculation that can optimize return. A gross rent lease may have historically provided the landlord with a return that was acceptable, however, the convenience of the gross rent model may be outweighed by the increase in the current operating costs for the property.
Maintenance and repair obligations
The allocation of responsibility for maintenance and repair — particularly regarding HVAC, roof, septic system and structural components — can significantly impact each party’s bottom line. If the lease form has unclear or outdated language, disputes can arise over the scope of tenant vs. landlord obligations.
With rising costs of building systems, constructions costs and insurance, many landlords are shifting more responsibility to tenants through triple-net or modified gross structures. Conversely, tenants should ensure the landlord retains accountability for capital repairs that go beyond routine maintenance.
In addition, if the landlord elects to sell the property during the lease term, the potential buyer will closely scrutinize the lease terms and the landlord’s responsibility for substantial repairs, replacements and improvements. Failure to assign responsibility for maintenance and repair of the property could have an impact on the sale price a third party is willing to pay for the property in the future.
Indemnification and insurance requirements
Leases should clearly articulate each party’s indemnity obligations, including scope, exclusions and survival periods. Insurance requirements should be updated to reflect current coverage standards, such as minimum liability limits, workers’ compensation policies and the inclusion of cyber liability coverage where applicable. The lease should require proof of insurance and provide remedies for noncompliance.
Assignment and subletting provisions
Commercial leasing markets fluctuate, and tenants often seek flexibility to assign or sublease as part of business restructuring or expansion. Leases should be reviewed to ensure the assignment and sublease clauses balance tenant flexibility and landlord control. Consider updating approval criteria to include specific factors such as the proposed assignee’s financial condition, intended use of the premises, and potential impact on other tenants. Also, consider adding language that provides the landlord more flexibility provided certain minimum criteria are met in the event of a sale of several locations to a new operator compared to the assignment to a third-party planning to operate a new business in the property, which should provide the landlord with greater control over approval of the assignment. Profit-sharing provisions should also be reevaluated for fairness and enforceability.
Use and exclusive-use clauses
The lease should clearly describe the permitted use and may also include restrictions to protect the landlord’s tenant mix. However, these clauses should be regularly reviewed to ensure they are not overly restrictive or outdated, especially in the context of business and consumer trends. Landlords should confirm that exclusive-use rights granted to existing tenants do not prevent them from leasing to new, viable prospects. Tenants, meanwhile, should verify that their permitted use accommodates new lines of business or products, so they are not limited in their potential future growth or a need to adapt to a change in their business model.
Environmental compliance
Given increasing regulatory scrutiny and environmental liability, provisions addressing hazardous materials, compliance with environmental laws and responsibility for remediation should be reviewed closely.
If your lease form lacks clear language assigning responsibility for third-party contractors or tenant invitees, consider adding it.
Further, the lease should incorporate relevant statutory references if the premises may be subject to state-specific environmental programs (e.g., Massachusetts Contingency Plan or New Hampshire’s DES rules).
Default and remedies
Default provisions and related remedies must be clearly defined and up to date. Review what constitutes a default, the applicable notice and cure periods, and the remedies available to the nondefaulting party. In particular, ensure the lease includes provisions for recovery of attorney’s fees, interest on unpaid amounts, and the right to pursue equitable remedies like injunctive relief. Changes in bankruptcy law or court interpretation of self-help remedies should prompt corresponding updates.
Force majeure and business interruption
Real estate attorneys were busy during the COVID-19 pandemic analyzing force majeure provisions in commercial leases. The pandemic underscored the importance of well-drafted force majeure and business interruption provisions. Leases should clarify what constitutes a force majeure event and the impact on rent obligations or delivery timelines. Additionally, parties should revisit provisions addressing business closures due to health emergencies like pandemics, natural disasters or government orders. Clear language on whether rent abatement is allowed — and under what circumstances — can prevent costly disputes.
Renewal and option terms
If your lease includes options to renew, purchase or expand, these provisions should be revisited to ensure clarity and enforceability. Key terms such as notice deadlines, the method for determining rent during renewal periods and conditions precedent (e.g., no uncured default) should be unambiguous. Courts often construe vague option language against the party seeking to enforce it, so precision is critical.
Electronic notices and execution
As communication methods evolve, lease provisions regarding notices and execution should be updated. If your lease still requires notice “by certified mail” or does not contemplate electronic signatures, it is time to update those sections. New Hampshire has adopted electronic signatures, including through the Uniform Electronic Transactions Act (UETA); however, leases should explicitly authorize them to avoid challenges.
Periodic review and updating of commercial lease forms are essential to ensure legal enforceability, risk mitigation and operational efficiency. A lease should be a living document — responsive to changing legal standards, economic conditions and business realities.
Whether you are a landlord standardizing lease forms across a portfolio, or a tenant negotiating new space, keeping these provisions current can help avoid costly litigation, ensure smooth lease administration, and protect long-term interests and investments.
Sabrina Beavens is a director in McLane Middleton’s Corporate Department and Real Estate Practice Group. She can be reached at sabrina.beavens@mclane.com.
